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Assessment: Traditionally this is the lowest volume week of the year…the week that leads into Labor Day. It is even lower than the weeks before and after Christmas because at that time a lot of year end bonus money is being put into the markets. So, while those weeks at the end of the year are hardly “heavy” volume, they do provide more than this week.
The problem with low volume weeks is it is very easy for prices to be manipulated and usually low volume weeks are bullish in price action. So, if we know this going in, how can we use it?
If I am looking to get bearish…or more bearish…I will wait until the Friday before the holiday weekend…and often wait until the 3pm ET hour to enter some bearish positions to carry into the Labor Day week. If I am bullish, I would be looking to get into trades last Friday and ride the likely bullish lean of this week.
Options are very tough to play this week, even to the bullish side because often the action, while bullish, is not aggressive enough to offset the time premium decay in options. So, the bullish side is trickier to play than the bearish side.
Long story short, tough to read anything into this week unless volume shows up or there is a major market catalyst that occurs. Otherwise, this is a nothing week and it will just make a little mess of both bullish and bearish technical pictures.
Good luck in your trades!