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Market Stage
(7/18/2008) On Thursday we said that 'Advancing SBV oscillators increase the possibility of a recovery.' In today’s activity we saw further advancement of the S&P 500 and the DJI. However, the NASDAQ 100 was relatively weaker due to news of earnings from Google and Microsoft.
The medium term The 60-day SBV(20) chart show declining NASDAQ 100 SBV oscillator with both S&P 500 and DJI SBVs relatively flat. By the end of the session, we may read following SBV values: plus 27% on the NASDAQ 100, plus 78% on the S&P 500 and plus 72% on the DJI. These values are relatively positive level and would seem to rule out the possibility of a reversal or move lower. However, on Wednesday and Thursday we saw strong selling volume generation during the price advance and this may start a push for the markets to retest recent lows. We will continue to monitor this chart setting in order to see if SBV oscillator readings start to decline in the S&P 500 and DJI sectors; this might then suggest the increasing odds of the correction down.
Our longer term 1.5-year SBV(10 period) charts show further advancement of the SBVs. The SBV moves up and the buying SBV accumulation would be in the favor of the possibility of a recovery. From the same chart we may see that the NASDAQ 100 index is less oversold (fewer green SBV areas and absence of big volume surges) than the S&P 500 and DJI indexes. As a result within the last week we saw the attempts of the NASDAQ 100 to push the market lower while S&P 500 and DJI drove the market up.
Market Status
(7/18/2008)
Market Performance:
| | Last | Change | Volume | | S&P 500 | 1,260.68 |  | 0.36 (0.03%) |
| 4,751,175 k | | NASDAQ 100 | 1,823.23 |  | 30.24 (1.63%) |
| 1,046,214 k | | DJI | 11,496.57 | | | 49.91 (0.44%) |
| 976,484 k |
Today’s session capped a volatile week with the NASDAQ 100 relatively weak and down 1.63%, the S&P 500 barely gained 0.03% and the Dow added 0.44%. The entire week saw the NASDAQ 100 index up 0.68%, the S&P 500 put on 1.71% while the Dow finished strongly up 3.57% for the week.
The day ended with a daily volume of 4,751 million shares on the S&P 500. This volume was 30% more than the daily volume average of the past 3 months. The string of higher than usual volume session continues.
NASDAQ 100 - 7/18/2008.
1-day Intraday, Modulated Volume.
Volume Analysis:
9:30 – 11:00 Opening the session extremely lower than the rest of the indexes, the NASDAQ 100 continued the move lower. The entire time period was used by the index to generate buying surges (a buying surge is a spike in the volume moving average that appears in the index volume pane and is accompanied by green – denoting buying volume - on the SBV oscillator pane). The characteristic of the buying surges were not very intense or the spikes were not high. However, they were spread over a longer duration.
11:00 – 12:00 With a surplus of buying volume put in during the last time period; the index was set to move up. It moved up to touch the opening level and continued to trade there for an hour.
The reason for the stall was the generation of selling volume which initiated during 11:13 and can be seen by the red in the SBV oscillator panel.
12:00 – 16:00 As the index was very negative, a small amount of selling volume caused the index to trend lower and this last time period was the result.
The NASDAQ 100 moved towards the intra-day lows of the morning and generated large surges of buying volume at those points.
While a very negative day, the NASDAQ 100 did generate a large surplus of buying volume.
Short Term (lasts a few hours to a few days): The last short term had talked about possible an unchanged but volatile session where traders would close out options positions. What played out was a strong uncorrelated session where the major indexes were slightly positive while the NASDAQ 100 traded negatively from the start. Its decline was due to the disappointment from Google and Microsoft which reported after hours.
We will continue to say that based on the moderate surplus of buying volume production, the markets are more than likely to move higher rather than lower in the near term. Volatility should move lower as the indexes’ moves begin to moderate.
Analyst's Daily Tip:
Trend Reversal
Volume surges Precede price trend Reversals. One or more large volume surges during a price decline indicates that Large Institutional Money is Buying. We call this Buying Volume, telling us that Price is about to Reverse and Price is about Increase. Contrarily one or more large volume surges during a price Increase indicates that Big Money is Selling. We call this Selling Volume telling us that Price is about to Reverse and Price to Decrease.
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Financial Press Overview:
Oil has begun to spell relief for the equity markets. On Friday light, sweet crude fell 41 cents to settle at $128.88 on the NY Merc. The record that it had traded at was $147 a week earlier. Prices at the pump remain high at $4.105.
Citigroup reported a second quarter loss but beat analysts’ estimates. The loss of $2.5 billion due to write-downs in the credit markets help to mitigate some concerns over big losses from Merill Lynch on Thursday.
Some more banks will be among the companies report next week. These include Wachovia Corp., Washington Mutual and Bank of America.
Key economic data for the week starting July 21st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Monday: |  | 10:00 Leading Indicators Jun -0.1% 0.1% |
| Wednesday: | | 10:35 Crude Inventories 07/19 NA 2952K |
| Thursday: | | 10:00 Existing Home Sales Jun 4.95M 4.99M |
| Friday: | | 10:00 Mich Sentiment-Rev. Jul NA NA
10:00 New Home Sales Jun 505K 512K |
Index-Day-Trading – Market
Research Team
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