Thursday, January 14, 2010
Identifying the Dynamics of a Range Day in the Stock Market
Today's stock market illustrates many features of a range day:
1) Advancing and declining stocks running close to even;
2) Price oscillating around a relatively flat volume-weighted moving average (blue line above);
3) Mixed performance--no distinct themes--among currencies, rates, and related asset classes;
4) Mixed performance among stock sectors;
5) Reduced volume on the day.
Catching these signs early can help traders identify day structure and formulate trading plans for the day.