Wednesday, July 08, 2009

Midday Update: Catching a Market Breakdown

The Market Delta chart nicely shows the breakout from the morning trading range. If you look horizontally, from bar to bar, you can see how we expanded volume as the ES market broke below 879, with the majority of the volume concentrated at the bid, as sellers became more aggressive. With confirming moves in oil and the dollar, and the more speculative NASDAQ and Russell issues leading the downside, the breakout showed that it was not a flash in the pan move. Obviously, if this is a genuine downside break--with longer-term implications given the much noted head-and-shoulders pattern in the ES--we should not trade back into the morning range (and the volume bulge between 878.50 and 882).