Tuesday, July 14, 2009

Morning Briefing for July 14th: Consolidating After Strength

The GS earnings were a bit of buy the rumor, sell the news, as we fell back into the overnight range going into today's open (top chart), moving below VWAP. On a longer term basis (bottom chart), you can see that we are consolidating above the prior trading range; that suggests acceptance of the new value level. Note the volume bulge at 897/898 in ES on the Market Delta chart (side histogram); that also corresponds roughly to VWAP. I'll be watching how we trade relative to that level to gauge early market directional/range trade.

Yesterday we had the strongest day in the last 20 trading sessions; it was also the highest volatility day in SPY over the past 20 days. Since 2000, when that's happened, we've been up the next day 16 times, down 9 times. Not a significant bullish edge, but certainly not a bearish one. I'll be following up with intraday Twitter posts (follow here) and will update the charts during the day.