Sunday, December 20, 2020

Options Expiration Spikes Volume Selling as Christmas Approaches

Friday's volume selling spiked on December expiration which will have clouded the intent of the sellers - be it confirmed distribution or mild selling.  With Christmas week next week we can expect trading volume to fall and likely remain low until January. 

Buyers were able to recover some of Friday's losses by the close of business for both the S&P and Nasdaq with only the Russell 2000 losing ground. However, no index lost significant ground or broke price support. 

Friday's Nasdaq trading intraday range was narrow as technicals remain bullish

Selling in the S&P registered a new On-Balance-Volume 'sell' signal, to go along with the earlier MACD 'sell' signal, but there was no challenge on nearest price support of the 20-day MA. So no real damage done.

The Russell 2000 is holding rising support but with the intraday trading range tightening there is not much leeway for further losses. 

As a final note, the Semiconductor Index wasn't quite able to challenge the last swing high as there was a new 'sell' trigger in relative performance. This scenario is not great news for the Nasdaq looking to continue with the run of new highs. 

I'm not expecting much for the next couple of weeks as the holiday season moves into full swing as far as Covid allows. Friday's late afternoon recovery sets up for a follow through upside on Monday, except for the Russell 2000 - which is heading in the other direction. 

You've now read my opinion, next read Douglas' blog.

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Investments are held in a pension fund on a buy-and-hold strategy.