Thursday, August 30, 2007

Qs show muscle

The curse of Thursday before Labor Day lives, but not for the Qs. Almost everything else was down . . energy, financials, gold, retail, housing, the DOW, the SP500, the IWM, but both the COMPX and the Qs (and SMH) managed to close in the green. Given today's overall negative market tone, the Qs are showing strength on increasing volume (first EOD volume finish above the 8 DSMA in 9 days). Historically, (my trusty Stock Traders Almanac) the NASDAQ has a 70% probability of of closing up the last trading day of August, and while I'm not betting the farm on this one (the Almanac has had less than stellar results this year), I think we will see Qs 49 before Qs 48. Of course, based on current volatility levels we could realistically see both Q49 and Q48 within Friday's range as risk managers bail prior to the long weekend.
The VIX had only an 8% range today, which it flashed at the open, then retreated, then clawed back up to close .50 off the high. This was an inside day hammer, with the VIX now fluttering around the 10/20 DSMA convergence, and still at the MACD zero line. The crystal ball is a little cloudy at this point and I'm reserving judgment on any likely next move until the day after Labor Day, which has a mixed history of performance.
Over the weekend I will begin a 4 part series on tells from NYSE and NASDAQ order flow.

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