Stock Market Melt-Up Pauses in Advance of Bernanke’s Testimony

By: PhilStockWorld

Courtesy of Doug Short: Pre-market futures pointed to a fractionally higher open, and that’s what we got. The S&P 500 hit its 0.07% intraday high during the first minute of trading and sold off in a couple of waves to its -0.63 intraday low in the early afternoon. The trade then oscillated in a five point range to a trimmed loss of 0.37% for the day, thus terminating an eight-day streak.

The 0.71% trading range today was at the 36th percentile of intraday volatility in 2013, but that a significant increase over the two previous days of the index’s melt up, which sported intraday ranges of 0.30% and 0.39%, some of the narrowest of the year. Today’s retreat precedes two days of congressional testimony by Chairman Bernanke. In a break with tradition, the text of Bernanke’s testimony to the House Financial Services committee will be released at 8:30 AM rather than at 10 AM, when the testimony begins. This definitly increases the opportunity for market volatility: Pre-market trading will react to text, spilling into the market open, and the House members will have more time to prepare their questions when the grilling begins.

Tomorrow should be quite interesting, and it will be followed by testimony to the Senate on Thursday. The general assumption is that these two days will constitute Bernanke’s last congressional testimony. He’ll no doubt be framing a message for posterity.

Here’s a 10-minute look at the week so far:

Today’s volume was a bit stronger than yesterday but remains on the light side.

For an additional perspective on today’s vanishing volume, here’s a look at the SPY ETF, where volume was lower today than on the holiday shortened trading of July 3rd.

The S&P 500 is now up 17.53% for 2013 and 0.37% below yesterday’s all-time closing high.

For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

- Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

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