Volume x Price Spiking At Local Highs, IV Low … What Could Possibly Go Wrong?
Stocks remain medium-term directionless but short-term volatile. Great news for bigs!
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Not Only Up-Only
by Alex King
Market’s getting a little tricky now. No major dumping and not only-up. Personally in single-stock equities I have been lightening up a little and moving more to cash (nothing dramatic, just at the edges so I have more cash on hand to deploy in non-margin accounts if the moment comes); in my short-term trading account I hedged going into the weekend and have cashed some short profits in pre-market trading today. (As alerted real-time, ahead of time, for our Inner Circle members). We’ll see what happens next. Until proven otherwise we remain in a bull market, so I am relaxed with long index ETFs and wary of shorts, hence cashing short gains quickly. There is always time to wind on more shorts if the market keeps falling.
Those of you who trade the indices may wish to take a look at the volume x price profile developing at local highs in, for instance, DIA below. Those of you who are members of our new option analytics service, Jay’s Options, (you can read all about it here - you don’t need to be a paying member of any other Cestrian or Cestrian-hosted service to join), may wish to look at that volume spike in conjunction with current IV levels in the indices.
For paying members of this Cestrian Market Insight newsletter we now run through our usual charts covering the main US equity indices.
Note - to open full-page versions of these charts, just click on the chart headings, which are hyperlinks.