TVO Market Barometer 5/24/16

TVO MB 5-24-16

The market blasted off today on high volume and left a lot of folks scratching their heads trying to figure out why. The technical answers reveal themselves if you look hard and long enough… such as yesterday’s ID/NR4 (an inside day that’s the narrowest range of the last 4 days) on SPY, right after a “turtle soup” reversal no less. But whether those patterns are any more valid than the H&S top (which, up until it failed, was the talk of the town) is often a moot point, because sometimes the real answer is that big market moves are often just the result of supply and demand. The Nasdaq has been racking up accumulation days all month long and today it was only a matter of time that the big board, well, finally got on board.

The IO system is still on the workbench (backtesting results will be available soon), so we decided to sell our SPY calls into strength (27% gain) and take profits while the going is good, because “sometimes if you let winners run, they suddenly run in the other direction. Or more simply, “Sudden winners can go south, suddenly.” Maybe we can we add that one to the Wall Street cliché lexicon. -MD

To learn more about market volume, The TVO System, The Heat Gauge (HG), or how to trade options follow me on Twitter (@TradingLicks) and StockTwits!

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