Wednesday, October 14, 2009

Midday Briefing for October 14th: Digesting Gains

We're trading above the day's volume-weighted average price (red line, above), near resistance around 1084-1085. Selling pressure early in the session (bottom histogram) has given way to net lifting of offers in the ES contract and also net positive NYSE TICK. Thus far, it looks like a consolidation at higher prices, which represents an acceptance of value at higher levels. As my tweet this morning indicated, we continue to see divergences as the Dow and S&P 500 Indexes have hit bull market highs today. Several sectors, including Materials, Industrial, Health Care, and Utilities, have not made bull highs to this point; neither have the Russell 2000 Index and NQ futures. I'm watching new highs/lows to see if we can expand those as we digest the recent gains. Thus far, new highs continue to lag levels registered in mid-September.