Wednesday, January 4, 2012

Morning Market

The good news for the bulls is yesterday's price action saw three major averages push higher through upside resistance.  In addition, we see nice volume advances on both the QQQs and IWMs, indicating an increased excitement on the part of investors.  The bad news is we are seeing very weak candles on both the QQQs and the SPYs, as typified by the following chart of the QQQs:

Essentially, prices gapped higher at the open and then stayed at that level for the remainder of the trading session.

Additionally, we saw over, more economically aggressive sectors rally yesterday as well:

The energy, finance, industrial and technology ETFs all broke out yesterday as well.  However, they all have the same problem as the major averages: very weak candles, especially considering the strong volume price below.

The short version is while yesterday's rally was impressive as a headline, the underlying fundamentals are not impressive -- at least not yet.  For this rally to be real -- at least for me -- I need to see stronger intra-day movement, especially when the volume print is so heavy.