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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 - The Beginning Of The End? Volume Is Showing A Potential Change 0 comments
    Sep 18, 2009 11:55 AM | about stocks: SPY, SPY, QQQ

    Friday  18 September 2009

    Where is the supply?  Where is the supply?!! 

    We have been looking for supply to come into this market in the declines in
    priceattended by high volume numbers, and that has not happened.  It
    appeared to have occurred on 1 September on the sharp price drop and
    volume spike, but that turned out to be a head fake.

    Most people do not know how to properly read volume, for smart money does not
    like to show its hand.  However, we maintain that volume HAS to tip off what smart
    money is doing, no matter how cleverly deft the attempt to cover their tracks.  That is the beauty of reading market activity!

    Yesterday's close in the S & P, was a new high, relatively smaller range, and a
    slightly lower close that was under the opening and under mid-range of the bar. 
    All of these little signs add up to weakness, not strength, as new highs were being
    registered.  If the market were truly strong, the range would have extended higher, price would have closed above the open and above the previous close.  None of
    those events happened, a red flag, and it puts past information into a different

    S & P 18 Sep 09

    A chart of the NASDAQ is also included for what now makes sense of a sign of
    "smart money" selling their longs.  The highest volume in many weeks, amidst
    several days of increased volume, barely made any progress to the upside. 
    There was a huge effort, [volume], that was only 500 tics above the two previous
    days' cluster closings.  When closes begin to cluster, it is a sign of struggle.  Note
    that the very next day on the NAS chart was still high volume, but the range was
    very small for all the effort.  This tells us that sellers were entering the market,
    overwhelming buyers by preventing the range from extending higher.

    Here we had been looking for price declines on high volume as evidence that
    supply, [selling] was flexing its muscle, while the sly "smart money people" were
    hiding their selling activity by increasing their sales on the way up, feeding their
    line to weaker buyers.  This is called a changing of hands from strong to weak
    buyers, for one thing smart money does NOT do is buy high.  Who buys high? 
    Listen to all these talking heads on financial TV networks exhorting the public to
    get back into the market as these fools preen in front of the camera effusively
    championing the higher prices.

    Idiots!  "Come into my web," said the spider to the fly. 

    Little pieces of the puzzle begin to fall into place, even with the alignment of the
    stars that auger a negative environment for markets.  We think this read on
    volume, starting with that day that stands out from Monday, 14 September, on the
    NASDAQ is the key for reading the present tense market results.

    There needs to be confirmation, and that will come in the form of declines that no
    longer recover lost ground.  This is not an invitation to go short, but moving up
    stops on any long positions, jetisoning all weaker performers, and eventually any
    long that starts to give back gains should certainly be given a higher priority.

    We are beginning to see a turn, but it needs confirmation is the bottom line.

    Disclosure: No position(s)

    NAS 18 Sep 09

    Stocks: SPY, SPY, QQQ
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