Tuesday, May 25, 2010

Stocks Recover And Close Up On The Day

The stock market gapped down sharply lower today on European worries but by the close the S&P managed to end the day up slightly.

You'll notice we saw similar price action last Friday where the market gapped down significantly lower but closed on its high. One thing that is beginning to stand out to me is that we are now seeing heavier volume on the up days. This is only the second day where we are seeing this bullish volume characteristic come into the market but it may be the beginning of something.

I'm still waiting for a decent rally to short so I've been on the sidelines. If I see an opportunity in the market either long or short, I will be sure to post my observations here on this blog.


editm2002 said...

Hi Kevin, I'm a bit new to charting, so I'm curious why you look at SPY instead of the S&P index directly? The candle on the index today looked like a hammer to me which would be much more bullish. Thank you.

RMD said...

yes .. . I'm wondering where the most traders are "caught" .. . on the long side or the short side .. . (I imagine the shorts were caught today)

since there is still a ton of bearishness, we could see a nice rally from here ...

Kevin said...

I look at SPY because it gives a more accurate reading of the opening. Most indices open at unchanged and then once all the components of that index open, the index will suddent move sharply. SPY for example gives an accurate reading right off the open.

Anonymous said...

The Euro rules the markets in these days, Kevin. We may not get any substantial bounce at all.

Steve-o said...

Hey Kevin. I'm really appreciating the expansion of your blogging efforts recently. It's a crazy market and TA gives us a great lens to make sense of it all.

Anonymous said...

Interesting comment by editm2002.
I checked and $SPX shows a bullish hammer while SPY doesn't. Similar with $USD showing a bearish shooting star while UUP doesn't. I use SPY, UUP, FXE, etc to see the changes intraday on stockcharts, but they give different picture compared with index.
Any comments?

Anonymous said...

I agree. Many of my sentiment indicators show extreme bearishness (in every asset but USD or gold) not seen since March 2009. This combined with dollar topping and euro bottoming is a good bet on long side. Not sure of target as we may get lower high this time.

Kevin said...

The indices do not give a true open which is why the candlestick formation will look different than an ETF which does give the correct open. Remember, candlesticks are based on the open to close relationship.

A few years ago I did a post regarding this very topic.


Anonymous said...

I'd rather wait for a dollar break out before going short.

TraderLars said...

what do you think of AMR as a long candidate?


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