The first week of February started out as a hopeful one for the bulls. By last Tuesday, though, it became clear from a volume perspective that the bears were still around to shake things up a bit, pushing our Heat Gauge almost up to its limit (We got pretty hot on Friday as well, so a Monday morning flush is a distinct possibility). We mentioned that although some accumulation was present on the big board, the reaction to the dip was not all unanimous. By Thursday, at a greater than a -10% drop in volume, the Nasdaq was struggling to hold any kind of volume conviction. And you know what they say… so goes the Nasdaq, so goes the market (Well, they don’t really say that, but we know there’s some truth in there).
TVO, our longer term volume oscillator, is continuing its climb from back in mid January and is now above zero, placing us in the range normally associated with a healthy market. But how can that be possible given the state of the correction at hand? Whether you call this a bear market, recession or just another correction, one thing is certain… The big players are always in the game in some way… they have to be, and volume lights up their trail like tracks in the snow. If TVO stays in this range, the message is that it’s likely the big boys are still on board, and with the Fed testimony coming up this week time will soon tell. -MD
Members please visit the forum for the latest signals and options positions we’re holding.
Not a member? To get TVO updates like this every day before the market opens, don’t miss TVO Daily! Start your Free trial today!