Stocks mixed on light volume

q0421.pngI haven’t had much to add the last few days so I took a break from updating. Prices have bounced nicely from the uptrending moving averages, and were signalled by an oversold double stochastic and a tail left on the candle. I had concerns about that set-up failing as prices fell below the averages with acceptance of value at those lower levels as defined by the volume distribution profile a pointed out a few posts back. That concern didn’t stop the market from a powerful rally, with a big gap up last Friday, and in the case of the Nasdaq/QQQQ, some decent follow-through today. But I do have some concerns at this point. I was hoping the rally would be accompanied by an increase in volume, but so far the volume has not picked up as one would expect with such a rally. Pushing up to calendar year highs with volume falling off is not a good sign for continuation. Momentum on a very short term basis is getting in the over-bought area, but still pointing up. A downturn in momentum with the light volume could be the start of some testing back into the gap area. If volume should increase if such a test should occur, that could be a negative sign. I’m starting to hear the crowd accepting that the low is in. I’m still uncomfortable about that double bottom. Price has come a long way from that area, but it is not impossible to revisit the lows.
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Of more concern is the anemic advance decline line. It has been in a downtrend for some time, even as the market was making highs last October. It has made a series of lower lows and lower highs. The current rally has not created a new high yet in the Nasdaq advance/decline line. I drew a yellow horizontal line where one could occur if this rally continues. The S&P looks slightly better in this regard. I would like to see some pullback here in the stock indexes so volume and breadth can be reevaluated.
Gold still looks like the rally within the downtrend is rolling over. Oil is going ever higher. I suppose it is going to the moon like everyone says. I still expect a pop of the bubble. Trends in oil are sharply higher, obviously. There is some minor divergence setting up, but I won’t step in front of this strong a market until there are several clear divergences and the trend turns down, or at least weakens. Initial shake-outs will probably be met with more buying, until at some point it isn’t. Hopefully there will be technical clues to catch a good downmove.