We saw heavy selling these passed two weeks on increasing volume. Look to sell into any rally if we see a decline in volume. A true rally will coincide with a massive drop in the VIX. Above we have the four top line figures, SPY, DIA, QQQ, and IWM (from left to right). Notice the increasing volume noted by the darker green and the incredibly large percent down days in the markets.
We have an inverted head and shoulders forming on the daily chart of the S&P. This week we broke out above the inverted hammer formed on a weekly bar during week 28. There has been more balanced environment of buyers and sellers, and the VIX remains in the low 20s. We are expecting this to continue, but remember that earnings announcements are still popping up all week long.
An Inverted hammer on the weekly top line figures, once again on stronger volume. The trend thus far this year has been lighter volume on the rallies as compared to the declines. The general daily trend channel can be seen below. Chop between the upper and lower support and resistance level is possible, we’ve been seeing nice conditions for swing trade setups and great intraday trading.
We saw a stream of selling this past week; however volume did not jump up by that much. The chart is semi-broken and choppy looking. We will continue to go with what is working, buying pullbacks in strong up trending names like SNDK, NFLX, and GLD, hedging with the QQQQs, SPY, or DIA.
The market, while bullish this week, is in the midst of a possible head and shoulders pattern on the weekly timeframe. We will be watching for a break below the low of the prior week’s bar on the move up to get short.
The weekly chart is extremely choppy. Doji’s and opposing tail hammers make for a difficult trading environment across all timeframes.
“Sell in May and go away” holds true for investors once more as heavy selling continued last week, the biggest monthly loss since February of 2009. Volume was well above average on this past months selling and with all the news overseas, investors are shaken. Why do we care about the “investors” if we are short term traders? Investors are the ones that move the market on a month to month basis, while certain day trading and high frequency firms…
A little triangle at highs broke out on Friday sending the market upwards once again. For those looking to jump on board I would caution and wait for the talking heads on CNBC to use the verbiage, “This market cannot be stopped,” or “Everyone needs to jump on board.” Then go short.