Where's the Volume

Posted by downtowntrader | 4/10/2007 10:06:00 PM | 6 comments »

Volume has slowed to a crawl recently as the indices keep forming narrow range candles. I continue to take it slow as things could go either way here short term. While I am on alert for a reversal here, now that the gaps have been filled, I haven't seen any topping candles or reversal patterns. The biggest warnings are the declining volume diverging from rising prices, and the narrow range days at resistance signaling some indecision. These clues should be heeded, however, there is not enough information yet for me to lean to the short side. On the contrary, there are some positive signals recently which may lead to higher prices near term.

Here is a chart of the Q's showing the divergence between volume and price. I can see

NASDAQ 100 Trust Shares (ETF) (Public, NASDAQ:QQQQ)
I can envision a scenario where the Q's pull back to the 20 day sma and then move on to test the February highs.



Vanda Pharmaceuticals Inc. (Public, NASDAQ:VNDA)
Here is a decent looking chart. I've been tracking VNDA for a while now and it may be setting up for a buy here. It is in the process of retracing into the large breakaway gap and could be finding support on the lower band.


Thats it for tonight.

Good Luck,


Joey

6 comments

  1. Woodshedder // 12:33 AM  

    Joey, the divergence of price and volume is definitely to be noted, and I agree a visit to the 20day is likely. However, my "feeling" about things is that we may go sideways and let the avgs. catch up that way, rather than a retrace.

  2. downtowntrader // 10:53 AM  

    You could be right, and I'm not sure if it will go sideways or retrace, but I don't think were launching any rally right here. If I'm wrong, so be it and I can jump in, but I think I'm gonna lay low here.


    Joey

  3. Anonymous // 7:39 PM  

    It's wise to be wary, but don't be too alarmed by low volume just yet. The Passover holiday just ended, and with it more traders will be returning to their desks and to the floor.

    Keep an eye on volume Thursday and Friday to see if it improves.

  4. downtowntrader // 8:30 PM  

    Thanks for the note anonymous. I had read that somewhere else as well, and while I don't doubt the holidays effect, it's the trend of volume that concerns me. Today volume rose as the markets turned lower marking a distribution day. We'll see what gives over the next few days.


    Joey

  5. Woodshedder // 4:24 PM  

    Good call waiting it out Joey. I hope you got in on some things today when the market turned. What a spectacular turn around, I must say.

  6. downtowntrader // 5:20 PM  

    Hey Wood,
    I actually did pretty much nothing today other then trading around some open positions. In retrospect maybe I should of had some buy setups ready, but I'm really trying to not press here. I have enough open positions to profit from a rally and I'm not convinced yet that this is it. Hope you did well today.

    Joey