Another Low Volume Trading Day…

Posted by admin

August 27, 2008

Stocks see-sawed through a dull day as major indices ended the day in a positive territory. Total volume on the NYSE is ever decreasing while volume on the Nasdaq was a bit higher than seen in recent days. Market internals were positive with advancing issues edging over declining issues. But with volume so low, a 2% up or down day on major indices wouldn’t make a difference. The reason volume is such an important factor is because it gives a sense of conviction that the big money is supporting or distributing the stocks in the market. As I highlighted yesterday, the market is in holiday mode and might swing up or down but don’t expect the real direction of the market until next week.

My scans are showing that majority of the stocks are in no-man’s land. Even the strongest stocks from the healthcare and biotechs are pulling back from their recent highs to 20/50 DMA support area. I would like them to wiggle around the support, shakeout the weak hands and breakout again on strong volume. Buying stocks near their support on big breakout is highly profitable. With the kind of market we are experiencing you might have to baby-sit your open position as it can reverse with a blink of an eye.

Commodities, financials and homebuilders had a nice day today while airline stocks were the biggest loser of the day.

I have been trading lightly as there is not much action in the market lately. I will try to keep it light until next week when we expect to see some volume after the holiday weekend.

Trade lightly or take a break!

Elizabeth Hurley