Friday, August 28, 2009

Morning Briefing for August 28th: Back in the Range

Yesterday we saw stocks (ES futures, top chart) try to make new multiday lows, only to snap back into their range. Today we see the reverse, as an attempt to take out the highs from 8/25 was firmly rejected on aggressive selling (bottom chart). As is generally the case, the inability to sustain the new highs targeted the day's VWAP as an initial downside objective and the midpoint of the multiday range as a more distant objective. Stock sectors are uniformly down from their opening prices, indicating breadth to the rejection of higher prices. First half hour volume came in at pretty average levels; I'll be watching for signs of a slowdown in volume to handicap the odds of staying in the overnight range (vs. breaking down further into the multiday range).