16 billion. That was yesterday’s global stock market volume. Although that number sounds “iBankCoin-like”, that is just about average volume for the past 50 trading days, so no big whoop.
Yesterday’s rally caught me by surprise, yet I am not beleagured or befuddled. I am market neutral, looking for cues as to when and where we will break out of this consolidation.
Currently, trading support on the SPX is the opening price of 886 on May 18th, which was also the low of the day (don’t just take my word for it, look it up). Secondary trading support would be 881, which was yesterday’s low.
As far as absolute support near term, it is 875, which Ragin Cajun had identified in one of his prior posts. We breakdown significantly below that, on big volume, and you can probably pull out a bottle of ketchup and stick a fork in this rally, as a pullback of 8% – 10% could occur from there.
Near term, resistance is 911 (odd, no?) with heavy resistance at 917, which is the 200 day MA. If we close above that today, don’t get all “Viagara-ed up” just yet. There is more resistance at 923 (May 20th high), 929 (May 7th high) and 944 (January 6th high).
Bull markets are defined in hindsight, not in foresight by chart chomping, Twitter oogling internets.
However, if the market can break 944, then we could have a good chance of sprinting ahead to 1008, which puts us back in Novembers market numbers. Were that to occur, it would be a 51% rally off the March 6th low of 666. Even then, that would still be fairly consistent with the bear market rallies of the 1930’s.
Look for the market to be rangebound here. I think it is highly premature to conclude that this consolidation over the past 3 weeks is near done. For the market to rally another 2 – 3 months, we need to see a healthy pullback to “oversold” territory again. Obviously, we are not there yet.
So, with that said, if you’re looking to trade, you’ll need to play the sector rotation game, thus increasing your chances for losses. Just be forewarned that you’ll need to be quick on your feet to take profits, and then move to the next area of attention just to survive a butt-kicking. That type of environment just might characterize the whole summer, as we could get stuck in a trading range as volume declines, and traders periodically wipe the boot prints off their asses.
A break above the May resistance numbers, especially January’s high of 944, would effectively be the breakout of this consolidation that the market Bulls are looking for.
I, on the other hand, will watch and wait, sitting on 48% gains ytd, and may end up sipping on lemonade, whilst reading books in the shade and comfort of my hammock this summer.