Tuesday, May 25, 2010

Big Swing Intra-Day....

Volume seems to matter when it matters and doesn't when it doesn't. What do I mean? I have no idea. It seems that when volume supports a position, then it matters. If the volume argument doesn't support an argument, the position holds merit regardless of volume, because volume doesn't matter. A circular argument? Absolutely. Isn't that what we all do? We either talk our book, or preach some self-serving opine, often without skin in the game. I let the argument slide for those with skin in the game, otherwise, thoughts and arguments are no better than opinions. And we remember the most popular saying with regard to opinions, don't we? If not, then google it.

Often, traders seek patterns. They look for patterns that replicate, then hope to profit by predicting the appearance of the pattern's doppelganger. Take a look at the last four days on the SPY. Last Thursday, we basically went out at the day's lows. The next morning, we gapped lower, then closed right beneath the day's highs. The next morning started off well, but those terrible ultras (insert sarcasm here) took over near the close, and we went out at the lows.

Now, we arrive at today, which offered up another terribly large gap down, only to stage a late-day rally and close near the day's highs. Apparently, with this pattern, the ultras take every other day off. The worrisome part is that the lows made on the days that gapped lower have gotten progressively worse. Even though the rally was impressive today, it just put us back to a resistance area, although with some momentum, the SPY could make an attempt at $110. This resembles a bottom attempt. However, I would prefer a pullback to a higher low, or at least a successful retest of the $104.50 area.

The agriculture stocks have become the whipping boy of the markets. They are the St. Louis Rams of the stock market right now. When the market is down, they are down. When the market is flat, they are down. When the market is up, they are less down. Hey, even the Rams won one game last year. At some point -- and I think much sooner rather than later -- these are going to make for a very good speculative buy.

Look at AIG: The shares rallied 5% into the late afternoon after support held at $32. The rally seemed more to do with the strength in the financials, but does it really matter? Within the financials, GS looks strong, and with a small push forward, a move towards $150 should develop.

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