Light Volume Shows Signs of Weak Rally, False Jobless Claims

Well the market finished up about 1% for the short week on very light volume, I think I heard Bob Pisani from CNBC say we’re having 30% less volume than six or seven months ago which is quite the difference. In any case here’s a quick technical analysis on the S&P 500 and a few reasons why I think there is some validity to what I’ve been saying recently concerning the strength of the market.

As you can see we’re up on light volume and trading near the top bollinger band even though we just passed the 50 day and 200 day MA. Having both key MA’s that close to the high end of the market’s relative strength index is a bearish sign, and being up on light volume adds to that. I think we had a lot of short covering at the end of August and next week the bears will come back with a fresh round of shorts to kill this weeks gains.

I’ve been tempted to increase my silver holdings for the past two weeks but I am remaining patient and holding back for now.

To the precious metals bulls, be patient and remain solvent a little longer. A lot of people are jumping on gold and silver because they’re on a roll right now. Don’t let anyone pump and dump you or make you believe anything you haven’t put time into researching yourself. They’ve all done the same thing the last three or four times gold and silver blew up, just as the deflationists have ripped on gold every time it goes through a correction. Remember back in May when we all thought gold was going to the moon right before the European debt contagion came to a head? Believe me, it will be nothing short of obvious when gold and silver actually do break loose, it won’t be a measly 5-10% monthly gain so stay focused, hold on, and pick your spots wisely.

______________________________________________________________________________________

Also, one last thing I want to point out… a big reason the market got excited was because of the weekly jobless claims being better than expected. However, because of labor day, only 41 states reported jobless claims, one of those states being California. Of course, the Feds then made up their own estimations. And uh If there’s anything to say about government projections….(fill in the blank)

Advertisements

About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

One Response to Light Volume Shows Signs of Weak Rally, False Jobless Claims

  1. Pingback: Half Day, Dollar Up, Chinese Margin Hike, Monthly Volume « Aaron Basile

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: