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.