Very low volume on the Dow and NASDAQ today. The Emini closed down 1.5 points at 1,383.25 on Monday. We got the bounce anticipated after Friday’s action with the Emini closing 2 points above the open. However, is this correction going to continue and what is the NASDAQ telling us?
The Emini fell on Friday and both range and volume were above average. However, as noted after Friday’s close, the volume and range were no so great as to indicate panic and broad based profit taking. In addition, the TRIN (as I measure it) was not very negative. All of this pointed to a bounce on Monday, particularly if the Emini opened weaker or with an Oops pattern (open below the previous day’s low).
Well the Emini did open down 3.5 points at 1,381.25 but it wasn’t a full-blown Oops pattern. It fell to 1,378.00, the low of the day, and then rallied a further 9 points to hit a high of 1,387.00. The Emini then dropped off sharply in the afternoon and eventually closed at 1,383.25. Range and volume were both below average at 9 points and 0.9 million contracts traded respectively.
NASDAQ beats Dow for once
Volume traded on both the Dow and NASDAQ was very low today. The Dow made a Doji candlestick pattern, with the open and close very close together – indicating market uncertainty. Whereas the NASDAQ rose quite strongly. We could be seeing some sector rotation, as the Dow takes a breather and the NASDAQ catches up.
The chart above shows divergences between the Dow and NASDAQ. Today the Dow futures fell, while the NASDAQ futures rose. This pattern is indicated by red dots on the chart above. Please note, I’m posting this chart a day late and we have a repeat divergence pattern on Tuesday. Normally the NASDAQ leads the Dow and so this pattern is considered bullish.
Trend indicators neutral
Trend indicators are now neutral. The Trading Index (TRIN) oscillator turned up today, which means we have 2 indicators long and 2 indicators short. The TRIN oscillator tends to be the most “erratic” trend indicator I use and so I’m not surprised to see it fluctuating so much over the last four days.
Good Emini trading tomorrow.