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Low Volume Doldrums...

4/26/2011 9:10:29 AM

Light volume in a tight trading range ruled the day...

Take no aciton.

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Stock Market Trends:

Stock Market Trends

- ETF Positions indicated as Green are Long ETF positions and those indicated as Red are short positions.

- The State of the stock market is used to determine how you should trade. A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will.

- The BIAS is used to determine how aggressive or defensive you should be with an ETF position. If the BIAS is Bullish but the stock market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance. The BIAS tells you to exit that ETF trade on "weaker" signals than you might otherwise trade on as the stock market is predisposed to move in the direction of BIAS.

- At Risk is generally neutral represented by "-". When it is "Bullish" or "Bearish" it warns of a potential change in the BIAS.

- The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.

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Value Portfolio:
We hold no value positions at this time.

Daily Trading Action

The major index ETFs opened mixed then moved lower in the first fifteen minutes then reversed to move higher for five minutes only to reverse again which began a sell-off that would last until late morning. The remainder of the session was spent with price moving higher until the beginning of the final hour when one more shake out move began. That move would be short lived and the major indexes moved higher into the close. This left the major indexes closing mixed with the NASDAQ-100 closing higher but with the Dow and S&P-500 closing lower. This left all three major indexes in trading states with BULLISH BIASes. The Semiconductor Index (SOX 443.41 -0.21) closed relatively flat, about the same as it had closed last Wednesday. The Russell-2000 (IWM 84.34 -0.11) closed with a modest loss. The Regional Bank Index (KRE 26.14 +0.12) posted a fraction gain while the Bank Index (KBE 25.10 +0.01) was largely unchanged. The Finance Sector ETF (XLF 16.08 -0.02) posted a modest loss. Both bank indexes and the finance sector ETF are in downtrend states and the bank index and Finance Sector ETF have a Bearish BIAS. All are below their 20-DMAs and 50-DMAs. Longer term Bonds (TLT 92.95 +0.35) posted a fractional gain. It remains in a trading state but has a BULLISH BIAS. NYSE trading volume was light with 696M shares traded. NASDAQ share volume was light with 1.487B shares traded.

There were five economic reports released:

  • New Home Sales (Mar) came in at 300K versus an expected 280K

The report was released a half hour into the session.

The U.S. dollar fell another tenth of one percent to close at a new two year low.

Implied volatility for the S&P-500 (VIX 15.77 +1.08) rose seven percent and the implied volatility for the NASDAQ-100 (VXN 17.22 +1.37) rose nearly nine percent.

The yield for the 10-year note fell four basis points to close at 3.36. The price of the near term futures contract for a barrel of crude oil was flat closing down one cent at $112.28.

Tech (+0.2%), Utilities (+0.1%), and Healthcare (+0.1%) advanced while the other seven economic sectors of the S&P-500 moved lower led by Materials (-0.7%).

Market internals were mixed with decliners leading advancers 6:5 on both the NYSE and the NASDAQ. Down volume led up volume 3:2 on the NYSE while up volume led down volume nearly 2:1 on the NASDAQ. The index put/call ratio fell 0.57 to close at 1.05. The equity put/call ratio fell 0.05 to close at 0.58.


Monday's trading was on light volume with Hong Kong's and European markets closed for holiday observances. We will have to give the bears time to bring the markets lower but the signal we received of an imminent move lower is still valid. It appears U.S. markets will open higher, largely on the support of higher closes on European markets.

The Fed Open Market Committee (FOMC) begins their two-day meeting on Tuesday and will release its latest policy statement at 12:30pm on Wednesday (Normally the FOMC releases the statement after 2:00pm). This can affect that markets as it may reflect the projection of changes to the fed's Quantitative Easing II (QE2) which is set to be completed in June. We note that implied volatility has risen significantly in anticipation of a larger move by the markets.

We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to mark@stockbarometer.com.


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