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Monday, October 10, 2011

Nice Gain, Ugly Volume

 When I logged on this morning, about 10 minutes after the market open (I never trade the open, so I walk my dog first thing in the morning), I immediately knew that we had another bailout (Dexia, a big Belgian bank, which apparently owes a boatload of money to the Fed), because all I saw was a big green candle on the Finviz screen. I figured a follow through day was a cinch, but as the day wore on it became pretty apparent to me there wasn't a whole lot of volume. We barely got average volume on the SPX (these are preliminary figures that will probably be revised higher, but not likely high enough). Nobody was selling, and 15 minutes after the open, nobody was buying, either. We did get another last minute ramp job, good for almost 10 points, whih broke the 50dma, but I wouldn't trust that action for a second. The HFT boys must have had a lot of fum trying to front run ech other, because I don't think anyone else was in the market.

At least on the Nasdaq they weren't playing games with the 50, because it gapped above it at the open. Bad news here: the preice relative line is starting to flat line again.

Even the Dow played the 50 game, although it, too, got above it early. It was actually threatening to break it from above when the last minute ramp took it almost 100 points higher. Notice the price relative line is starting to work it'w way up again.

The Russell 2000 is siting right on the 50dma. Had this gone through it I might feel a little more bullish (I don't think the technical geniuses at CNBC look at the Russell, but they must have gone ape over the Dow), but I;m starting to smell a bull trap coming. The only positive I see here is that the price relative line has stopped it's free fall, at least for now.

I am actually quite amazed at the lack of volume, considering that thi is a very new driven market. It may be that traders are starting to wake up to the BS (how many more "Europe gets bailed out" stories are we going to get?) and are starting to it it out. Some of them might even be down in Zuccotti Park with the protesters, carrying signs like "Down with HFT!". Well, maybe.

I will have the new highs update shortly.

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