Tuesday, December 17, 2013

Divergences, Divergences- S&P 500 Price/Volume Heat Map Dec. 16

In yesterday's trading, the S&P 500 gained roughly 60 basis points, primarily on gains in the tech industry and industrials.

Looking at the price/volume heat map, however, does not give such a sanguine picture of trading. At least as total demand across the market is concerned. Of the ten sector groups, only four posted overall strongly positive demand on the trading day, with strong demand defined as stock with strong volume and price gains occurring concurrently. The four sector groups were financials, tech, industrials, and utilities. So why the stronger gains, my take it was a lack of selling pressure, as the supply-side of coin looked weak. More so, some of the stronger sector groups on a price basis, were not necessarily supported by broad demand. These groups include discretionary and energy names. Lastly, I would note that total volume contracted significantly on the trading day. To me, this all suggests the current rally has no underlying strength.

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