Thursday, December 12, 2013

And An Increase in Supply- S&P Price/Volume Heat Map Dec. 11

The market took in on the chin in yesterday's trading, reflecting the warnings embedded in the previous push to new highs that lacked on juice. Although the the 110 basis point decline occurred on lower than average volume, we did see an expansion versus the move to the highs. This suggests to me that traders are in distribution mode.

This view is supported by what we saw in the yesterday's price/volume heat map. Sans staples, which by the way was the only sector seeing an increase in prices, supply ruled the day across the sectors. The increase in supply and lack of demand, in my mind suggests that the price decline does have some support. Although we will have to see if it have any traction, as a simple short-term trend analysis continues to suggest higher prices. With that said, I am watching move top side to gauge the volume characteristics. If we keep moving top side with decelerating volume, we are probably just seeing operators pairing positions before the decline.

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