Looking at the major averages and the intraday VWAP for clues for the rest of the week. (June 15, 2022)
QQQ SPY DIA
The Fed announced their decision, a 75 basis point hike, which was not unexpected at all, they announced it here at 2:00. And the market ( NYSEARCA: SPY ) kind of gyrated around a little bit. It initially went up a little bit and then it came down, you can see it here. This is 2:00, and then finally, here at 2:45, 45-minutes later, this thing finally closed up here.
So during that time, between 2:30 and 2:45, the market started to rally and it caught some kind of direction. Prior to that, basically the whole day really, we were just getting this. You’re getting the same thing with the Qs ( NASDAQ: QQQ ), you name it. I will show you the vaunted Dow Jones Industrial Average ( NYSEARCA: DIA ) but I really just want to look a the Qs ( NASDAQ: QQQ ) here.
So we get this sideways move and then come 2:00 the Fed does what it does. The market does what it does, which isn’t much. And then finally, we get a move up. So this was really, on a short-term basis for day trading, this was really the time that you could buy it. This is a 15-minute chart, we can cut it down to a minute and get an earlier buy point. But what I wanted to show you is this, the volume-weighted average price, that’s this orange line. That’s the average price that a stock trades at according to volume. So it is weighted by volume, not by price, different than a moving average.
But for most of the day, and this just reflects very light volume, everybody agrees that this is the price so it is not moving much. And then the initial reaction, down here, was below the volume-weighted average price. But then what happens? The stock gets sucked right up to the volume-weighted average price and then it blows through it. And then from that point on it stayed above there.
Now, we get the same thing with the SPY ( NYSEARCA: SPY ); it blew through there and then stayed above there. So it was only at this point when it became clear that the buyers were outweighing the sellers, that they were more aggressive than the sellers were because this is staying above the volume-weighted average price.
And it is more remarkable that it was right into the close. Because during the day people are doing what they are doing. Okay fine, but as we get into the close they are kind of finishing up what they are doing and they are looking at what tomorrow is going to bring. And so, generally speaking, you have got to look at this market, towards the end of the day, being skewed to the buyers.
Let me get to a clearer chart. Here’s the issue, that’s day trading stuff. Here, this is a very, very solid ceiling right here, 390.00 here on the SPY ( NYSEARCA: SPY ). And so that gives us, what, 10 points, 2.5 percent before we get a hard ceiling? So as I look at this, I think the entire day is kind of a wash. What it didn’t do was give the bulls more credibility for moving higher because this was actually a pretty crappy close. It was essentially right in the middle of the intraday trading range.
And so this was not decisive one way or another. All it showed on that intraday look was that into the close there was move buying. But here’s the question, is it maybe short covering because we’ve got options expiration the day after tomorrow? There’s a boatload of puts outstanding and so we could very well see more of a rally tomorrow and into Friday. Tomorrow would probably be the day that they start closing out those puts.
What I am telling you is this, you can only read so much into the intraday trading activity. But then when you go out longer-term, in this case just on a daily bar chart, you do have to kind of start looking at other things, such as options expiration in a couple of days. Again, just based on what I am seeing here, you are going to have some room to the upside. You are going to have options expiration, you are going to have those puts either being closed out or rolled out. And so I would say, over the next couple of days, we are probably going to see more of a lift. I would just suggest that you not really look too far into it.
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