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Stocks Up, Volume Down, Momentum Down, Careful

Bycjrosen

I 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

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6 Comments

  1. Pingback: US Treasuries Rise As Markets Wait For Currency Traders To Move The EUR/JPY Higher Or Lower « EconomicReview Journal

  5. “They only see what they want to see.” – Sixth Sense

    Does SPY volume mean anything? Why are you not watching SPX volume… Also what is the merit in looking at volume bars on 15m timeframe? Why are we drawing arrow based on last candle of the day?

    Do you see anything on daily volume of SPX ???

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g…

  6. The market is strong. A new cycle has begun. Spain got their bonds purchased – that's what the real crash depended on. After that happened, we burst through all lines of resistance, with ease. Welcome back to low volume weekly gains, nearly for no reason except there are not enough sellers. People want to ride out this bull until it loses all steam. Investors are ready for S&P 1300 – they won't stop until they get what they want.

    May 25th (AM) was the bottom – end of C wave on the correction down. The only way that we'll crash harder this time is it there's a 5 wave correction from April 26th. **There hasn't been a 5 wave correction down EVER in this bull market that started March 2009. Only 3 waves (ABC).*** If we get 5 waves going to down, it will begin this week coming, and end this week on Friday. Iff we get the 5 waves going down, then we will get a crash like none other – 5-15% market decline within 1 week. But again, a 5-wave correction has yet to happen in this bull market – only ABC corrections down (where we finished C wave on the morning of May 25).

    If you missed your buy opp this time, study the charts harder. Then figure out why you missed the June 8th buy opp, if that one was missed too. Figure out what happened then , using every indicator you can. Buy opportunities as grand as May 25th will come again, except the next big buy will be a 'bear ETF' from Proshares or Direxion.

    For now, we're on cruise control. Set your stop losses loosely and enjoy the ride.

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