From the Trading Desk

Volume Drops as AAPL Finds Support; EURUSD Gets Hit Hard

Major averages close in the green with a late day surge, but volume slides. Buyers were out early pushing the market to the highs of the session before the lunch hour. Unfortunately, the highs weren’t to be seen again. Volume slide noticeably on the NYSE and modestly on the NASDAQ showing institutions weren’t out accumulating shares. AAPL enjoyed a comeback as volume surged but the stock still remains near the lows of the week and will need a good showing Friday to avoid a bad weekly candle. All eyes will be on tomorrow’s job report where the unemployment rate is expected to remain below 8%. Our eyes will remain on the reaction to the report.

The last 30 minutes of trading the NASDAQ was pushed up nearly 10 points on very light trade. Pushing above its 200 day the index still remains below its 50 day moving average. On the other hand the QQQs remain below both its 50 and 200 day moving average. We are less than a week away from the QQQs seeing a death cross. CNBC had analysts on discounting the death cross as a lagging indicator. 1998 was a time when the NASDAQ ran right back up into the death cross then collapsed finding a new low. Be very careful discounting known patterns. A volume surge above the 50 day would certainly bring on a buy signal.

An interesting development was the drop in the EURUSD. Typically a big drop in the EURUSD would be followed by a big drop in Equities. Not so today, but the drop in the EURUSD did give a boost to the US Dollar index. The Dollar index is heavily weighted by the EURO and further drop in the EURUSD will certainly continue to elevate the US Dollar. A rising dollar should put pressure on equities if the correlation between the two holds.

What a week for US equities and we continue to see wild and crazy action in individual names. Sure the Fiscal Cliff is on the minds of traders, but the NASDAQ is 100 points or so off the lows after the first bit of optimism showed up. Perhaps we can get a sustainable rally from here, but we need this market to confirm with a strong price move with increased volume. Enjoy the action following the release of the Non-Farm Payroll!

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