Why the Anemic Market Action?

Some may think that yesterday’s anemic action in the market was due to the Veterans Day holiday but I’ve been seeing it for a while, and frankly it’s bothering me. The market has been rising for the past couple of days on stock VWAPs that smell of a bull market turning bearish; specifically, when a market rises on negative VWAPs that are greater in magnitude than positive VWAPs, that’s viewed as a contrarian indicator signaling a market reversal.

What the above means is that investors and institutions are getting out of the stocks with the negative VWAPs and moving into stocks with the positive VWAPs or into cash or other instruments. What we need to see for the market to move forward are convincing positive VWAPs, smaller negative VWAPs, and a lowering VIX. Too bad that the VIX seems to have put in a bottoming tail today at 23. Since this is a semi-holiday (the market wasn’t closed), the bottoming tail doesn’t have quite as much meaning as it would have on a typical trading day but I’d treat that as well as topping tails on the S&P 500 (SPX) and the NYSE Composite as potential signs of a market reversal. For the bull market to continue, we need to see the Dow Transports (DTX) to close above the 400 level and more specifically, the 404 level which defined previous resistance.

Comments

[je:]

What is a VWAP?

Nov 12 08:24 AM

[damienhaas:]

Volume Weighted Average Price


On Nov 12 08:24 AM je wrote:

> What is a VWAP?

Nov 12 09:12 AM

[ebworthen:]

Up on low volumes, corrections high volume.

Pump and dump by insiders, with the individual investor being baited into the market.

We are in a secular bull market, with a bull rally funded by FED liquidity, bailouts, and cheerleading.

The rally is cotton candy. It's real as far as the "technicals" and the "numbers" but that is all they are, numbers.

Any money you think you have doesn't really exist beyond the database and the technoloigical infrastructure. Reality is jobs and production, and these are not rallying.

Nov 12 10:49 AM

[David Van K...:]

What did the VWAPs say in March, April, May, etc.? Do VWAPs have a good predictive track record? Is this useful information or nonsense? Just looks like stream-of-consciousness to me.

Nov 12 10:49 AM

[ebworthen:]

Secular bear market, bull rallly - I meant :-(

Nov 12 11:02 AM

[cyclingscholar:]

VWAP: Very White Anglosaxon Protestants. Always been leading indicators! Seriously, Doctor Kris....the vast majority of the value of your article is pointing out the failure of the transports to confirm the Industrials in recent weeks. This goes back to the Dow Theory, which predates any analyst on wall street who is alive at the moment.

Nov 12 11:49 AM