Despite low volume the last few months, the stock market continues to move higher. Let this be a lesson. Volume is an indicator that comes second to price action. In addition, overall volume is not as important as the balance of volume. Total volume may be low, but stocks can continue moving higher as long as buying pressure is stronger than selling pressure. SPY volume has been below its annual average since early December. Even so, On Balance Volume (OBV) and the Accumulation Distribution Line moved to new highs over the last few weeks. The new highs in these indicators confirm the new highs in SPY. Other than that, the song remains the same. SPY is overbought and ripe for a correction, but there are simply no signs of significant selling pressure.
Key Economic Reports/Events:
Feb 15 - 08:30 - Retail Sales
Feb 15 - 08:30 - Empire Manufacturing
Feb 15 - 10:00 - Business Inventories
Feb 15 - 10:00 - NAHB Housing Market Index
Feb 16 - 07:00 - MBA Mortgage Purchase Index
Feb 16 - 08:30 - Housing Starts/Building Permits
Feb 16 - 08:30 - PPI
Feb 16 - 09:15 - Industrial Production
Feb 16 - 10:30 - Crude Inventories
Feb 16 - 14:00 - Fed Minutes
Feb 17 - 08:30 - CPI
Feb 17 - 08:30 - Initial Claims
Feb 17 - 10:00 - Leading Indicators
Feb 17 - 10:00 - Philadelphia Fed
Charts of Interest: Tuesday and Thursday in separate post.
-----------------------------------------------------------------------------
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
