Sunday, December 03, 2006

Blog Links and Market Stats for Monday AM

Market Ideas:

Trader Mike tracks the recent volatility in the indices.

Declan Fallond finds weakness among internals.

A Dash of Insight questions the negative spin on economic data.

How Trader X screens for gap trades.

Altucher's links, including playing the baby boomers in China.

Trader Eyal on process improvement in trading.

Weekend linkfest from Barry Ritholtz.

Bill Cara explains his market stance with a broad perspective.

Adam Warner passes along some very interesting observations on correlations.

Energy has been the strongest sector of late, finds Ticker Sense.

24/7 Wall St. finds e-commerce and Amazon looking healthy.

Carl Futia revises his forecast and offers a perspective on flexibility in forecasting.

Millionaire Now! on profiting from the office condo boom.

Interesting market stampede notion is among the links at Abnormal Returns.

Market Perspective:

I took a look at the intraday volatility of market days in the ES futures, given the sharp moves during Friday's trading session. I did not find a directional bias following such volatile days, but did find evidence of serial correlation. In other words, these volatile days tend to cluster. That will have me looking for further volatility early in the week, particularly if we continue to see sharp moves in the dollar and interest rates.

Despite recent downmoves on Monday and Friday of this past week, we're still seeing over 73% of S&P 500 stocks trading above their 50-day moving averages. That figure is almost 66% for the S&P 600 small caps. At 34 new 52-week highs among S&P 500 stocks, we're well off the momentum peaks from a couple of weeks ago, not to mention the March-May peaks. But how many S&P 500 stocks made new annual lows on Friday? Zero.

In other words, we've been seeing volatility, but not sustained weakness. Each time we've had strong selling, buyers have jumped in. Funds are judged by their annual performance and perhaps no one wants to be on record at year's end as out of the equity market. Whatever the cause, if the buyers continue to absorb this selling we could see further tests of the market highs in the not too distant future. The options players are bearish and the economic weakness and weak dollar are on everyone's radar. The contrarian in me wonders about the upside.