S&P retreated some more on decreasing volume while the show-on-the-hill dragged on. Ideally, one wants decline on decreasing volume, but these are not the kind of times one learns in the books, so, who knows what decreasing volume really means?
Nothing’s really changed from yesterday. But I noticed one very interesting development. Average True Range (ATR) on S&P has registered a high value not seen since April 2000. ATR does not give us any clue for a probable price direction. It simply is a measure of price volatility. Usually, extreme volatility happens near turning points. I am not sure if it is of any significance or not. There is no guarantee that it will not hit a higher number tomorrow. It is basically telling us how rudderless, confused and news-driven the market is – so easy to manipulate if some party has enough capital to send a shock wave in the future markets. It is very difficult to carry a sizable position; unless one has enough conviction as either a bull or a bear to sit through the churn.
Day traders, of course, love it. I know one who is having the time of his life. It's hard life, but he likes it.
On the weekly chart, S&P is nicely channelling down. It had a hard bounce off lower channel boundary, and is now pulling back. An optimist can say that it is forming a falling wedge, a pessimist can say all MAs on this chart are pointing down, and down it will continue. The positive divergences set on the recent low are still in place. But, it all depends on the outcome of the show-on-the-hill.
As I am typing this, futures are up, some say it’s because Buffett has decided to dump 5 billion into Goldman Sachs. It may change direction tomorrow. Markets as jittery as this can turn on anything. So, if I feel like I have to have a position, I may need to give it a wide room to gyrate.
I still am sticking to levels I computed in a previous post.