Friday, December 6, 2013

All Wound Up- S&P 500 Price/Volume Heat Map for Dec. 5 Trading Day

Yes, we saw another distributive day on the S&P 500, as the market fell about 40 basis points with supply side dynamics coming in heavier in some select sectors. That said, this overall volume levels contracted versus the the prior day. Additionally.........

..... the more cyclical sectors outperformed both the non-cyclicals (where the supply side dynamics were focused) and the market as a whole. More so, the cyclical groups price/volume dynamics were more benign, relatively speaking. With this setup, I am not surprised that equity prices popped after the employment report, especially considering we had seen declines for four days in a row. I would suggest watching the volume levels as the S&P 500 approaches the high. If volume levels pull back and prices cannot get through the highs, it is likely that the strong opening move in equities was nothing more than traders trying to exit positions by pulling fresh blood.

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