NYSE Program Trading

NYSE Program Trading

I checked the NYSE.com website, under market information, the record indicates for the last 5 weeks program trading has ruled the market. Looking back over the last 5 years, this has never happened before. The program trading on the NYSE is leading to sharp reversal of stock prices when there is low volume. If you are day trading, be aware of large block trades and volume spikes indicating possible reversals of the current trends. Over the last 3 years, the month of June shows the highest percentage of program trading, leading to a spike in prices for a mid-summer high for the year. There is enough correlation during the week of July 13-16th being the high for the rest of the year, known as a seasonal trade. Just a friendly reminder for those who have been long term investors going into the summer months of July and August. The harmonic heartbeat of the indicies has been declining, indicating a narrowing trading range for day traders. As long as the harmonic heartbeat is trending downward, prices may creep upward. When there are spikes higher in the harmonic heartbeat, prices begin accelerating downward faster. The last recent spike upward in the harmonic heartbeat, took the Dow index down to 9800. The support of the signal lines is positive, with the critical area of 10300 for the Dow, SP-500 1116, and Nasd ironically at 1973.

The Best indicator to use for swing traders and long term investors is to use the McClelland Summation Index and apply the harmonic stock signal lines. For those who have Telechart 2000, the symbol is T2118, and those who don’t have Telechart 2000, you can check in the financial newspapers for the reading. These two numbers will be different, as explained by Telechart 2000. The next indicator should be the percentage of stock trading above their 200 day moving average. This indicator is still below the yellow and red harmonic clock signals, indicating further decline in the breadth of the market. (T2107 in tc2000) I wrote about this indicator earlier this year, the reading was above 90%, then declined to 40%, currently it is reading around 55%. While this drop falls within the Fibonacci ratio, the market has only declined from the high of 10737 to 9907, or 7.75%. The lowest recorded reading for this indicator was 1.8% of the stock trading above their 200 day moving average, just after the correction in 1987. The reading of 55% is the average over the last 9 years coming out of the secular bull market. Remember, we have never had two consecutive secular markets of the same type since the creation of the Fed, in 1913!

The rest of the month has economic reports, which will create quick profits for day traders, while the swing and long term investors may be in for a rocky ride till September. You must actively manage your portfolio, using options as insurance to protect your portfolio from long term declines. I will be writing more about the use of options for downside protection in the coming months. The Fed will be meeting at the end of the month, most expect them to raise rates at least ¼ of a point if not ½ point.

Also, the major geopolitical events will be occurring at the end of this month, expect an intensification of the violence and possible oil service disruptions.

God Bless
Doc