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Low Volatility, High Volume

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Today's lackluster trading in the major averages is reminiscent of those lazy summer days where new technical developments are few and far between. But wait...the summer doldrums aren't here just yet! One only needs to look at today's volume to see that large positions are changing hands.

As of 2:38 EST, volume had clocked in at 1.4 billion shares on both the NYSE and NASDAQ. The Dow and NASDAQ are trading with a slight bearish bias below their relative highs. Although the bulls can be lauded for maintaining most of the recent gains, one wonders whether the equity selling might grow more severe with the bond market seeing heavy buying today. The 5-year (FVX.X), 10-year (TNX.X), and 30-year (TYX.X) yields all closed near the lows of the day.

A glance through the major sector indices shows that most are trading in the red, but not with major losses. I keep the COMPX, INDU, and SPX on the list in order to get a feel for which groups are showing relative strength/weakness.

Snapshot of sector indexes:

The oil patch is outperforming the market, despite a rather boring day of trading in crude futures (cl03m). The OIX.X oil index is ticking higher for the fifth consecutive session, with the recent breakout above resistance at 253 adding fuel to the bullish momentum. (No pun intended). The OSX.X oil service index is also looking strong with a breakout to new relative highs. The next area of horizontal resistance is the February highs near 92. The p-n-f charts are looking bullish as well. Check out the OIX, using a standard 1-dollar box.

OIX.X oil index - p-n-f chart:

The tech sector is faring worse today as the SOX.X retraces yesterday's gains and moves under the 350 resistance/support level. Also lagging the market is the NWX.X networking index. CSCO is giving back 2.5% following last night's earnings. Shares had ramped up into the announcement and investors are now expressing their displeasure with the company's shaky sales forecast for the current quarter. After the bell, biotech and software investors will be focusing on quarterly reports from CEPH and THQI.

Kent Barton

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