Monday, November 30, 2009

Midday Briefing for November 30th: Recognizing Range Trade

Today's trade thus far has illustrated many qualities of a range day:

* Oscillation around the volume-weighted average price (VWAP; red line);

* Relatively flat VWAP line;

* Mixed volume transacted at offer vs. bid (bottom histogram);

* Mixed distribution of NYSE TICK;

* Difference between advancing and declining NYSE stocks of fewer than 1000 issues;

* Mixed sector performance (strong financials, weak small caps);

* Inability to sustain prices above or below overnight and/or prior day's range.

Interestingly, trade has not been particularly slow despite being range bound. That has given us greater amplitude of movement around that VWAP line. Good trading opportunities can develop when we have decent volatility during a range trade.


Ryan said...

What program are you using in those screenshots?

OKL said...

i dont mean to sound like a doomsayer, but the Dubai event is not to be taken as a "given".

Just thinking about the similarities between LEH & Dubai, such as the "last minute negotiations" by Barclays, that it happened over the weekend, the "non-committal statements" by Barclays & Abu Dhabi.

I'm not getting complacent here I tell you; if HSBC & Standard Chartered faces problems, the whole "Bankers' Dominoes" could start all over again- think minimum capital requirements, bad loans, commercial real estate, deteriorating assets, increased unemployment, credit default swaps... and last, but not least, "bailouts".

There'll no doubt be a lot of deal-brokering going on behind the scenes and whether the parties can come to an agreement is well beyond any outsiders' knowledge- Iran issue, "petro-dollars", deficit financing, geo-political deals etc.

All I would say is that there is no doubt that the central banks & governments, after seeing the damage LEH did (they dont see the benefits of course), will have a whole lot of incentive to keep this under wraps- i doubt there's alot of "political capital" left for another momentous bailout for the banks.

these banks are like terrorists damn it... "Give me what I need & want or I'll blow the whole system up!"

Incredibly annoying and we actually fell for it... @_@

Anyway, just staying on my toes and keeping my wits about... boy, that LQD is really getting some bids eh?

just a rant on a relatively slow day; saw 2 opportunities, placed the entry, missed the order and have been doing notihng since then.