The phrase ‘trading heavy’ typically depicts a market environment where equities aren’t necessarily plunging, rather they can’t sustain gains so they drift lower. The phrase also perfectly describes the environment we have been in for the last month. While the declines haven’t necessarily been sharp (although 9/9 and 9/13 are an exception), it seems as though stocks have recently been opening higher only to fade and give up those gains during the trading day.
The table below shows the daily change in the S&P 500 tracking ETF from the open to close over the last four weeks. As shown, including each of the last three trading days, SPY has traded down from the open to close in 13 of the last 20 trading days. While that may not seem like much, it is actually the highest pace of open to close declines so far this year. The last time SPY was this consistent to the downside from the open to closing bell was last December, which interestingly enough was the period leading up to December’s FOMC rate hike.