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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • S & P - Acts Sloppy At Area Of Resistance. Supply Selling Still Absent 0 comments
    Oct 26, 2010 9:59 AM

    Tuesday Morning  26 October 2010

     Monday was a failed probe to the upside.  Price went higher,
    ostensibly breaking out of the trading range to the upside, but the
    rally was ephemeral, selling off early in the trading session.  By the
    end of the day, the low end close let us know that sellers were in
    control.  A look at volume tells us that there was no new supply
    selling entering the market.

     To clarify the difference between selling and supply selling, there
    is buying and selling that goes on every day.  What supply selling
    is when there is a wide range down and volume increases appreciably. 
    This charting service does not show daily historic volume, but look at
    the wide range down bar back in May, on the left side of the chart,
    10th bar from the end.  Volume on that day was 5.7 million contracts,
    and the market broke sharply.  That was supply entering the market,
    not just ordinary day-to-day selling activity.

     Compare the 5.7 number of contracts to the recent highest level of
    volume below, in red.  Volume that day, 19 October, was just over 3
    million contracts, almost half the supply selling day back in May. The
    point being made here is that there is still no evidence of supply
    selling in the market, despite the weakness seen yesterday and
    continuing into this morning's activity, with price down 700 tics, as
    we write.

     What does this mean?  The daily trend remains up since the July low. 
    The intra day trends are now down, and they appear to reflect more
    of a normal correction and not new supply.  The Fed and political
    interests in propping up this market may lead to a protracted trading
    range for the balance of the year.  No one has a clue as to how price
    will develop, but it looks more and more that distribution is going on,
    in preparation of a markdown in stock prices.

     The edge remains in the bull's court, as it were, but any showing from
    the buyers has become anemic, of late.  Nothing to recommend, at this
    point.


    S&P D 26 Oct 10

    Themes: S P, SPY, QQQQ, Dow
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