Wednesday, April 8, 2020

Below the Surface: Hope Springs Eternal

Monday saw stocks up a whopping 7%! Yesterday was huge as well, until it all fell apart late in the day. Today's looking good (it's 11:04am) with the S&P up 2.23%.

Well, dang!, if it were only about the price action...

Everyday I go through an extensive checklist that takes me into the weeds on equities, fixed income, currencies and commodities. One of areas with regard to equity markets is the volume stats. There you can get a feel for the quality of any given move, or the conviction, let's say.

When you get a big move you look to the volume to determine whether it's unbridled passion (big, above-average, volume) on the part of those pushing the price, or whether it's just a bit of nudging against stubborn counterparties. I also look under the hood to see whether the volume is broad-based across sectors (healthy), or concentrated in certain spots.

Here's from my notes on just S&P 500 volume at the end of the day on Monday and Tuesday, and a few minutes ago today. 

Monday's end-of-day S&P 500 volume note:
  • Spx volume 11% below 20-day average on a huge +7% day.
  • Consumer discr and Industrials only sectors seeing above ave volume 13% and 12% respectively.
  • All other sectors volume substantially below ave.
Tuesday's end-of-day S&P 500 volume note:
  • Spx volume 4% below 20-day average on -0.16% day.
  • Consumer discr (cruise lines) and industrials (airlines) again dominating the volume +23% and 22% respectively, both closing notably higher on the day. Suggesting dumpster diving as opposed to serious across the board buying...

Today's mid-morning S&P 500 volume note:
  • Spx volume 27% below 20-day average on +2% day.
  • No sectors seeing up volume. Huge under-average for all but consumer discr and industrials.
So, yeah, this week has been largely about traders coming into, of all things -- amid a surreal hunkered down world -- those bloodied leisure and airline stocks. 

Fascinating! As in, I definitely ain't going there yet!

Below is the visual: Note the huge below-average %s on all but Consumer Discretionary and Industrials. Top 3 above-average volume stocks are Carnival Corp, American Airlines and Delta Airlines. 

Hope springs eternal!

Click to enlarge...

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