Monday, July 27, 2009

This morning's market action may have been less volatile than recently, but that doesn't mean the market did not provide clues. Lets discuss...

After the 10 AM EST housing number, when the market caught a bid to the 980 level, we noticed on our trading desk that while the market was making intra-day highs many "large", high beta names, were not participating. AMZN was still down over a $1, AAPL was still negative, and GOOG was relatively weak as well.

Is this the type of price action we would expect to see in a "strong" market? Clearly, not. A subtle hint was provided by the market that perhaps the shorts were the better side in the morning. Noting this could have stopped a trader from chasing long near the top end of the range. Likewise, it could have been used as a clue to initiate some shorts- particularly in the QQQQ's.

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