TVO Market Barometer 11-3: Is this the calm before the storm?

Volume was pretty quiet for a jobs/Fed week and the bullish chartists out there are just chalking it up as another low volume consolidation move higher. Or is it just the calm before the storm?

TVO, our volume oscillator, has been headed south since mid-October, a move that says the big boys are at least starting to take a breather. Also quiet is the ever sinking VIX, which dropped below 9 intraday on Friday (the first time since 7/27, right before the last significant market pullback).

Now before the shorts start foaming at the mouth, we are entering a time of year that is known for its bullishness. But what about all the talk about the seasonal rise just getting underway, and markets with these kinds of gains in the past have mostly gone higher?

Well, in the last 17 years there have only been 3 years that the S&P has exceeded its current gain by the end of the year… 2013, 2009 and 2003 (’03 and ’09 were tremendous post bear market years). How far back do their seasonality studies go? Needless to say, a more current data sample that doesn’t pre-date the age of computers (and bell bottoms) would be a bit more convincing.

Next Day Move called an UP day this week for an +8% gain on our SPY calls. Together with an earlier IO trade, our overall account grew +2% putting us at just over a +17% return so far this year. -MD

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