The theme the past 5 sessions has been not only a lack of follow through, but also a lack of participation. While yesterday's 2% move appeared strong on the surface the underlying buying was relatively anemic and the volume was subdued as well. The early morning gap today looked impressive, however it faded through the session closing near the lows as volume dropped off yet again. The lack of upside follow through has also kept the series of lower highs in tact thus far and has also kept in tack the lack of follow through in either direction indicating one thing clearly -a choppy market.
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| NASDAQ 06/07/12 |
Referring again to price action last year, two possibilities are Scenario 1 with a tradeable rally or Scenario 2 with a volatile whipsaw range may be in store for the Summer.
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| Trade or Range? |
Underneath the surface the breadth the past two days has not been in keeping with the spirit of the move, with yesterday's 2.4% move coming in with less breadth than the 2.8% down move on 06/01 and today's continuation coming in extremely low.
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| Waning Breadth |
Confirming this divergence, the 10 Day summation of this is near 0.
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| 10 Day Breadth |
The current bounce in view of underlying breadth should be viewed with suspicion until there is further buying confirmation. Currently the market is in a moment of stasis in regards to short term breadth and considering the longer term view is still a down trend, these pauses are more likely the calm before the storm rather than a pause before rocketing higher.
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