At times I find it difficult to analyze
holiday shortened market weeks. Sometimes I question which analysis
should be contextualized to a short week and which should be
addressed based upon its own merits. Obviously the most glaring is
accessing low volume days and its significance when the indexes are
closing up 1%+ on half days. Additionally, most of the major
indexes have closed up this week approximately 5% so price is clearly
divorced from volume.
One of the easiest things for me to do
is flip my opinion, especially on bounces like this; however, being
burned enough times on false rally breaks in down trending markets,
I've also learned some restraint in altering my views too quickly.
One of my expectations coming into last week was to see an increase
in volatility. One means I've been measuring this is by the number
of 1% close over close or 2% intraday moves on the SPX. There have been 16 trading days so far this month, and 6 of them have exhibited
this characteristic and two of them occurred this week. I view this
as confirmation.
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| SPX |
I continue to expect some form of
retest of the 11/16 low and I am still leaning towards looking for
shorting opportunities until the market verifies otherwise. The main
verification I am looking for is increased buying stepping in as the
first clue and then the indexes beginning to show signs of an renewed
uptrend. I perceive the bounce this week as suspect until proven
otherwise.
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