Monday, July 13, 2009

Midday Briefing for July 13th: A Look at an Upside Breakout

After a selloff could not take us below the overnight lows (bottom Market Delta chart), we moved above the volume-weighted average price (red line) and broke above both the overnight highs and the range highs going back to last week. The volume transacted at the market offer price vs. the bid (histogram bars at bottom) shows that buyers became aggressive once selling dried up in the morning. By viewing each bar as a separate volume distribution, we can see how we steadily accepted higher value over time.

12:02 PM CT - I've added the top, daily chart for SPY to illustrate how, after breaking below the May/June lows, we've now re-entered that longer-term range. Should we hold last week's lows--and particularly this morning's lows--on selling during the week, I would expect a move back toward the range midpoint, which corresponds to the prices we saw in very late June.