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Index Wrap

The only thing missing was volume

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Stocks surged on Thursday with the big board trading all-time, yes all-time highs as oil prices saw sharp declines to close back below $49.

I (Jeff Bailey) thought today's third-quarter productivity growth of +1.9%, which was down from 3.9% growth in the second quarter was a positive for the job market going forward. I say this as it relates to the May 23, 2004 Ask the Analyst column titled "Economics 101" and our discussion regarding high rates of productivity and nonfarm payrolls.

And going forward, should productivity rates begin to flatten a bit, as Fed Chairman Alan Greenspan said they should, equity bulls and inflation hawks will want to see oil prices abate.

Prediction: Bears have been harping that lack of jobs bad for economy. My prediction will be that once we get job growth, bears will be harping on the fact that wages are rising. On any pullback in the major indices, smart bears and bulls will be buying aggressively.

NYSE Composite ($NYA.X) - Daily Intervals

With the institutionally held NYSE Composite ($NYA.X) breaking to and closing at all-time highs, I've been forced to "stack" our conventional retracement on itself. All I do here is clone the BLUE 6,211-6,789 retracement, and stack it on top of itself. I still have my PINK fitted 38.2% retracement on the chart, and generally like the yellow "zones" that it helped create below 6,735.

I'd almost be willing to bet that if I "fit" that 38.2% to that September 21, 2004 close of 6,633, the resulting 61.8% retracement would mark today's close on the NYSE.

With October nonfarm payrolls due out tomorrow, I've marked the October 7th market response to when the September nonfarm payroll data was released.

NYSE Composite ($NYA.X) Chart - 20-point box

The current column of "X" building on the NYSE supply/demand chart follows a second column of "X" from 6,240-6,620 where it looks like somebody (most likely institutions) were eager to defend the bullish support trend.

Now, if I have one cautious critique for euphoric bulls it would be that today's session lacked volume. Don't worry. We'll get it. Something in the order of 2.3 to 2.5 billion is what I'd like to see on the NYSE.

If I were to make a guess just when we might see that type of volume as the NYSE breaks out of its summer's base, it would be on any pullback near the 6,700 level. The volume won't just come from bulls; there will be plenty of bears looking for offers too.

Market Snapshot / Internals - 11/04/04 Close

Good Gravy! The NYSE 5-day NH/NL ratio is up at 94.3% as the number of new highs explodes to 453 versus just 8 new lows. I'm rather intimate with two of the stocks that traded new lows on the NYSE in Pfizer (PFE) and Forrest Labs (FRX), both have a "drug" theme to them.

Were traders holding back in today's session? While volumes were brisk/heavy, neither the NYSE or NASDAQ breached the 2 billion share mark. Gut feel based on observation is that buyers are hoping for a pullback, a little hesitant to chase. But if the nonfarm payroll numbers are to the MARKET's liking, then all he- double-toothpicks could break loose to the upside, especially among 1, 2 and 3-lettered stocks where overhead supply becomes non-existent.

Who would have thought the NYSE would ever trade all-time highs again? Especially in a cyclical bear market (grin).

NASDAQ Composite (COMPX) Chart - Daily Intervals

The very broad NASDAQ Composite (COMPX) broke above its "cheater's trend" on Monday, and while it is still well off its 52-week high of 2,153, bulls look to be gaining ground where support should be firming from 1,952-1,971.

I added a "fitted" 38.2% retracement at 1,971 where I found closes at for October 6 and October 27. Once we found a close there, we did come back below. As such, I deem support in the 1,952-1,971 area, and would tie that to the NYSE 6,686-6,734 zone.

While today's volume has me thinking traders were still taking a bit of a wait and see approach, hopeful for a pullback, average daily volumes remain brisk at both the NYSE and NASDAQ. NYSE average daily volume is up a healthier 10% so far in November.

Broker/Dealer Index Chart - Daily Intervals

There's a lot of 1, 2 and 3-lettered brokers in the NYSE and the brokers have been an important part of the SPX/OEX gains. Bear Stearns (NYSE:BSC) $97.52 +1.9% closes at an all-time high. Morgan Stanley (NYSE:MWD) $53.78 +1.62% is working its way above its 200-day SMA.

S&P 500 Index Chart - Daily Intervals

Shorts are on the move after the "little" head/shoulder top failed at the right shoulder. A MASSIVE looking reverse head and shoulder pattern (look at a weekly interval chart) has unraveled in a bull's favor and its neckline looks to be 1,144.

Today's trade saw the broader S&P 500 Bullish % ($BPSPX) rise 1% with a net gain of 5 stocks to a reversing higher point and figure buy signal. Still "bull correction" status at 66% and would need a reading of 68% to achieve bull confirmed status.

Pivot Matrix -

Jeff Bailey

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