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Is Now A Good Time To Buy? Market Volume Update.

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There is a somewhat unsettling adage on Wall Street that goes “when bullets fly, it’s time to buy.” Well, no matter how you view the current Russia and Ukraine situation, it’s pretty apparent that on Thursday many investors put that adage to the test. More specifically, it was the Nasdaq that logged a high volume accumulation day with a +37% increase in overall volume from the previous session.

While the Nasdaq had a healthy ratio in favor of up volume, the NYSE ratio, on the other hand, was straight down the middle at about 1:1. That doesn’t mean that the S&P 500 is sitting this one out as there were already 3 volume accumulation days on the big board in early February. Last Thursday, Friday and this Tuesday, however, were solid across-the-board distribution days, so big institutions were certainly shaving off some risk in light of the recent crisis.

Looking at our Heat Gauge, though, I can’t help thinking that the temps last week could have been a lot hotter considering the severity of the market drop, which suggests to me that much of the war may already be priced in. Now, this may seem like an absurd notion, probably because most folks think that the buying and selling of stocks directly affects prices… which is generally true, however, if enough high volume institutional buying happens beforehand (like we saw in early February), the simple act of smart money staying put and sitting on their huge positions can also have an impact on prices albeit in the longer term.

TVO took a turn towards negative values last week and is now at zero, so we’re watching for a possible long term swing entry to develop over the next week or so. It’s important to note, though, that once TVO goes below zero, our long term portfolio will go to CASH. This basically means to wait it out, NOT to sell your stocks, but options trades are still very much in play. – MD

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