Volume Is Speaking

Today we bounced off the 200 DMA for the second time in 9 trading days. Even omitting the extreme volume from the 5/6 crash day, today's volume is saying there are fewer sellers than the previous test. Using NYSE volume (provided by Tradestation), today's volume was 1.7 billion versus 2.6 billion shares traded on 5/7, the day after the crash and the day we bounced off the 200 DMA. If Richard D. Wyckoff was alive, one of the greatest tape readers there ever was, he would likely say there were far fewer sellers today.

I liked the action in the EURUSD better than the close in the ES, but remain long both using options against my short inventory. Today the OEX options decayed enough for me to add some calls to my long position. Given the way we closed, I feel I'll get another opportunity tomorrow as well.

I rarely pay attention to Jim Cramer, but he said something today that resonated with me. "This market is anticipating a massive implosion. If one doesn't occur in the next 48 hours, we're going higher." I agree.

If we go higher, even if we were to reach new highs, I would not become a bull. I would merely add more to my short inventory. I am, however, open to the possibility that there can be massive fakeouts on the way to the eventual high. There can also be a crash at any time. I always try to be ready for multiple outcomes.