I mentioned in my last post that I viewed the market as running out of gas (temporarily) and expected a pullback. I still do.
The morning opened with a small drive down and on good volume, indicating supply. About an hour later, we get an upthrust, but it didn’t give much. We remained range bound through the rest of the morning and into the early part of the afternoon. In these conditions, it is always best just to sit on your hands – a good, descriptive phrase of what we should do in choppy conditions.
We then drove above the morning high, but volume wasn’t that exciting. The brief rally hit supply as we approached yesterday’s high area. The NYSE Tick readings were strong, and generally, I don’t like to fade strong tick readings in the afternoon, but the volume was telling a different story. Overall, volume was on the light side. If we were going to push through yesterday’s high, we needed more fuel. Also, volume should have receded promptly when price pulled back. It didn’t. Also, on those tick readings, we should have pushed up to yesterday’s high. Instead we stopped just short of it. Savvy chart readers would see the shortening of the thrust. Something didn’t seem right.
As the market fell back to the morning high, Ticks accelerated to the downside. It is unusual to see high positive Tick readings immediately followed by high negative Tick readings. That typically suggests distribution.
After all was said and done, we close the same as yesterday. Still anticipating a pullback.
Leave a Reply