Tuesday, June 30, 2009

Market comment for June 30th, 2009 on recent Volume

I was scanning my usual source of articles relevant to market action of recent days and I came across a chart and this one. In summary, the volume is low, too low to believe the rally is for real. To quote the author's first paragraph, "the NYSE traded with the lowest volume since January 5. The correlation continues: low volume - market up; high volume - market plunge. Rinse. Repeat." The author of these comments is Tyler Durden. I tend to agree with Tyler. Every technical book on market analysis tells me this rally since March 30th is a Bear market rally. Many want to believe it isn't and keep hyping the idea things are getting better, there are more Green shoots. But smart people know when the market goes up on lower volume, it is a Bearish sign. These signs are flashing red if anybody is really looking. Can it continue in this way? Absolutely yes. That is why we won't know possibly until October the true consequences of this market action.

July 8th, it was announced yesterday that ETF Ultra Longs and Shorts will have a reverse split. This will affect my TZA and those of opposite holdings, TNA, as well as FAZ, FAS and SDS etc. Read the news items or check the SEC filings for news on your holdings. The net change is dollar neutral but there will be a significant reduction in the number of shares.

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