Stocks Up, Volume Down, Momentum Down, Careful
Jun 17, 2010: 1:42 PM CSTI along with many other bloggers have been highlighting the recent rally that continues to form lower highs in market internals, volume, and momentum.
I’ve updated on the status on internals yesterday, but now let’s take a specific look at the SPY in relation to 15-min volume and momentum:
The question I asked was “Just How Much Higher Can this Thing Go on Declining Internals?“ That question still remains – check out that post if you haven’t already.
Above, we see the SPY (SP500 ETF) on the 15-min frame pushing higher after a positive momentum divergence and bottom at the $105 target on June 8th.
We have pushed to the upper range target of $111 and beyond to $112, but the push above $111 has been anemic in terms of market internals and momentum.
Volume has trailed lower each and every day of the rally, and so has momentum, with the exception of spike highs on June 19 and June 14 (spike highs in momentum are price confirmations that suggest that higher price highs are yet to come… and they certainly did).
Now as we see those new price highs, momentum – seen via the 3/10 Oscillator – is cleanly declining, beginning with the peak on June 14th.
There’s no sense in beating a dead horse with multiple posts on the same theme:
This is NOT the picture of bullish/breakout strength, and the multiple divergences are non-confirmations that challenge you to be much more cautious in your trading – resolutions of multi-swing negative divergences can be harsh to the downside… but it’s difficult to pinpoint exactly when the market will tumble – just know that risk is high.
My post from last week was superbly prescient:
“Bulls Willing to do Anything to Avoid Falling into the Abyss”
And that’s exactly what they’ve done.
Here are a few other recent posts on the key levels to watch in the stock market:
“Third Time’s a Charm? SP500 Tests Line in the Sand”
S&P 500 Poised on the “Edge of a Cliff”
Edge of Cliff Level to Watch in the Russell 2000
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
