It did not come as a surprise to see stocks come in a bit after Wednesday’s move. Volume was much lower on the NASDAQ at the beginning of the day, but rose steadily as the day wore on. Over on the NYSE volume was hovering around flat to slightly higher for most of the day. Throughout much of the day the price action suggested a healthy digestion of Wednesday’s action. Buyers didn’t have enough fill and began to bid up stocks at the end of the day. Thursday was another day where institutions stepped up and accumulated shares and were willing to pay a higher price for those shares. All in all, although volume mixed it was a positive day for the market.
Leading stocks took a back seat to the major indexes today, not a major concern here, but one we should be mindful of. Occasionally, this can occur where leading stocks take a break from outperforming the majors. We just do not want them to make a habbit of underperforming the major market indexes.
There are plenty of stocks that are setting up for big runs, many of them in tight price action. The “tightness” is something we really like to see, especially when the tightness eases back on light volume. It looks as if the stocks is wringing out the last few weak holders of the stock before making a big run higher. Having a stock showing tightness is a very bullish signal for any stock you own. If a stock tends to be more volitile or violent intraday price swings you are more than likely going to get shaken out and these stocks tend not to prodcue the gains tight ones do. Be aware of how your stocks are acting and looking for tight price action.
For a bonus, tight closes coupled with tight price action is even better.
Tomorrow we have options expiry, it could be a wild open or a tame one. We simply will just react to what we have in front of us and not worry about what the options market might do. Keep in mind we did see a large amount of SPY and QQQQ puts flood the market mid-September all the way into October. It should be interesting to see how this all pans out tomorrow. Or will it be a dud? What we’d like to see is our leading stocks blast higher with volume support and the overall market to have a positive day with volume. In the end, the market will do as it pleases and we can only take our clues from it and react.
Enjoy the weekend and have a happy Friday!
