The longest day of the year has arrived but most of Europe has already been sizzling for the past few weeks. Down here in Spain we regularly have been touching the 35 Celsius scale which is about 95 Fahrenheit for all you metricphobic North Americans. Although I love to bitch about the cold during the winter what really irks me the most is the insufferable summer heat here in Valencia which unfortunately comes with a ton of humidity – we’re talking 80% plus at times. Which is quite different from the dry desert like heat I had gotten accustomed to living in California for about 20 years.
Equities continue to be a mixed bag and while simple price tells one part of the story the volume profile also shows us the ranges where we should expect buying and selling pressure. Of course bear in mind that the volume profile is based on historical context and for a true perspective we would need to acquire fairly costly Level 2 access and then evaluate the offering and bidding lots. For the average retail rat Level 2 access is however way outside the budget so I guess volume holes it is.
Limbo tape – it’s what I call the annoying volatile sideways churn devoid of technical context we’ve been experiencing across the board since the beginning of June which has pushed retail into an early summer identity crisis. You may recall that it’s not the first time I’m talking about limbo tape and it probably won’t be the last. Now this may be a good time to once more remind everyone that we as retail traders have one principal advantage over fund managers or institutional participants such as trade desks or system operators.
It’s relatively quiet morning thus far which gives us time for another exercise in tape reading. This time we are going to take a more in depth look at equities and cover a few tell tale signs that tell us if and when the market has transitioned into another distinct phase. Let’s start with the Zero: