The S&P 500 has been in a tight range for 6 days, basically going nowhere, and has a lot of folks on the edge. Some are convinced that AMD and Apple are ominous signs that the market has just bitten off more than it can chew (Yes our obsession with omens can really make us believe that one or two stocks can take the whole thing down). Then there are the fear mongers that always seem to come out of the woodwork right before the Fed announcements, and this week we have the added bonus of yet another election to throw a wrench in the works. And then there are those that are just plain bored.
Well, the folks in the latter category might want to take a look a volume, because TVO’s sudden sharp rise to +2.4 (in contrast to the sideways chop) has been anything but boring… in fact, values between 0 and +3.0 have shown to be quite healthy. When you filter out all the other news and opinions with a volume lens (never mind the dark pools and money flows), the smart money moves become more apparent. Moves in volume very often precede price, and the longer we walk along the edge of this cliff, the more likely this upward momentum in the oscillator will continue… until it doesn’t. -MD
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