Light Volume Rallies Are Vulnerable To Profit Taking – Use Caution

June 28, 2021

Posted 9:30 AM ET – PRE-OPEN MARKET COMMENTS MONDAY – The market is making a new all-time high on light volume. The bounce off of the 50-day MA last week was immediate and that is a sign that the bid is still strong. We are likely to float higher, but these gains can easily be stripped away so use caution.

There wasn’t any incremental news over the weekend and global markets were flat.

As the week unfolds, the trading volume will dry up. We are heading into a holiday.

Longer term swing traders (3-4 weeks) should stay sidelined. I am more bullish now than I was a few weeks ago. Bonds have rallied, Chinese stocks are finding support and companies almost have another quarter of profits under their belt. In two weeks the bid will strengthen as earnings season approaches. Short term swing traders (1-3 day holding period) can take some overnights. PopBull is my favorite Option Stalker search for short term swing trades.

Day traders should look for the hot groups/sectors. Biotech (genome) stocks will be hot today and Chinese stocks could have some follow through. Look for heavy volume, technical breakouts and relative strength. Heavy Volume, Bull Run and Red Hot are my favorite Option Stalker searches.

Support is at SPY $426 and resistance is at the all-time high. I am favoring the long side, but I still consider this to be a low probability trading environment.
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