1/23 Daily Market Note: On the Sidelines
Volumes are lightest in last 2 weeks, while HK stages big recovery
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Hi Everyone -
I’m observing another very light volume day in /ES (S&P 500 Proxy) with ~700K contract lots transacted as of this post. This is merely just over half of yesterday’s volume and only about 40% of Daily Average Volume from the typical trading sessions since the beginning of 2024. Today may end up being the lowest volume session we’ve had all year.
This makes sense in the current context as conviction is lowest ahead of critical earnings this week as well as the upcoming FOMC event which could recalibrate markets into a new equilibrium.
The light volume manifests itself into a very choppy low-range type of session where the indices are range bound, while individual stocks make larger movements. See below that U.S. markets have traded inside a 12-15 point range up until this point. This tells me big investors are on the sidelines.
Overnight in Asia, we saw China/Hang Seng Stocks stage a rally. This rally is attributed to new developments over stimulus. The bullish reaction took place at the 14.7K-15K Hang Seng Region I was planning for from my note on 1/16 (image below). This is a testament to how important planning is. We have to be watching key areas ahead of time.
Below, I’ll discuss how I’m thinking about the situation. Read more below.
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