Current SP500 Gann Line and Volume Chart Dec 17

Dec 17, 2009: 7:48 PM CST

I wanted to show the current “Gann Squares” lines as a reference on the S&P 500, and also take a look at the declining volume bars on the daily chart.  Consider this one of my “Chart Art” posts, though these Gann Lines have been important at certain levels on the rally higher.

Let’s see the updated chart.


(Click for full-size image)

Starting with the 666.79 March lows, we see the following Gann Squares Lines all the way up the chart.

Notice price points where the market has paused or supported at these levels.  These certainly are not absolutes, but reflect one of the ‘advanced methods’ of Technical Analysis for looking at confluences at price zones or targets.

The main takeaway now is that the market has recently remained trapped between two Gann Square Lines:  That of 1,110 above and 1,077 beneath (although price is supporting above this level).

For reference, the next two upper Gann Squares Lines reside at 1,143 and 1,178.  There is also confluence resistance near the 1,150 price, so this Gann Line adds to that confluence… which would be the next likely short-term target on any solid break above 1,121 or higher.

For more information on these types of charts, see my prior post:

Gann Fan “Chart Art” of the Dow Jones

Gann Squares Reference Grids from the High and Low in S&P 500

Gann “Chart Art” Arcs and Fan in SP500 (July 28) If you extend the 1×1 line, it comes in about the 1,120 level now.

As another note, which has been said many times and in many ways, look at the negative volume divergence that has plagued the market since the March lows.

Volume saw its high of the year in March… and we’ve not seen a return to those levels after an attempt up in May.

Something might be structurally different in the financial system, resulting in lower volume, but the classic, “Edwards and Magee” style interpretation is that “volume leads price” and that volume is not confirming the recent highs with broader/deeper participation or enthusiasm on the part of the buyers.

But then again, we interpret volume in pre-2008 “Crash” terms… so it’s possible that pure interpretations of volume have changed as well.

Something to think about.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

10 Comments

10 Responses to “Current SP500 Gann Line and Volume Chart Dec 17”

  1. chomen Says:

    No, nothing has changed. It's not different this time.

  2. Corey Rosenbloom, CMT Says:

    Chomen,

    I agree, but if we keep going up, something's gotta give.

    Either price has to come down as the volume signal says, but if we keep going up, we'll have to accept that the classic way to interpret volume is flawed after the 2008 financial crisis.

  3. Ken Says:

    Corey, I remember seeing similar negative volume divergences on the 2003 recovery, and the market didn't pick back up in volume until march of '04. Not sure if that means it is to be expected, or if it is a function of share prices traded more frequently because they were cheaper (eg.Citigroup).
    Just a thought.

  4. CEO Trader Says:

    Volume will pick up at the end of the rally as shorts jump in. We still have one more leg up that will take us into January.
    Low volume is a sign of decreasing participation by big investors. The small time sucker investors will take it up the rest of the way. Sad but that's the way the financial institutions take away wealth.

  5. chomen Says:

    No, nothing has changed. It's not different this time.

  6. Corey Rosenbloom, CMT Says:

    Chomen,

    I agree, but if we keep going up, something's gotta give.

    Either price has to come down as the volume signal says, but if we keep going up, we'll have to accept that the classic way to interpret volume is flawed after the 2008 financial crisis.

  7. Ken Says:

    Corey, I remember seeing similar negative volume divergences on the 2003 recovery, and the market didn't pick back up in volume until march of '04. Not sure if that means it is to be expected, or if it is a function of share prices traded more frequently because they were cheaper (eg.Citigroup).
    Just a thought.

  8. CEO Trader Says:

    Volume will pick up at the end of the rally as shorts jump in. We still have one more leg up that will take us into January.
    Low volume is a sign of decreasing participation by big investors. The small time sucker investors will take it up the rest of the way. Sad but that's the way the financial institutions take away wealth.

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