The S & P 500 powered down with volume today.. Quite heavy volume too. A test of 1163 is starting to look like a very good possibility now and would at least open up the possiblity of that reverse head and shoulders pattern setup I mentioned in an earlier posting.
After looking more carefully at this index it appears that a sell signal was triggered on June 22nd 2005. The high for that day was 1219.59 which tested the high for the 17th of June which was 1219.55. Not only did the 22nd price bar test the June 17th price bar, it also finished with a close below the 17th price bar and on dramatically lighter volume.
The volume for the 22nd of June 2005 was 1.38 billion and the volume for the 17th of June was somewhere near 2.5 billion. The June 17th volume was skewed by quadruple witching.. so I am a bit perplexed as how to make a judgement on whether I can make a valid volume comparison given the quadruple witching skew. Either way it looks like a comfortable sell signal to me.
The other thing going on with the S & P as you may have heard me mention several times on other indices is a potential bearish monthly MACD cross coming up on this index. We do not have a negative or bearish crossover yet, but it is starting to look like this is the way it wants to go..
So as of this writing the bias to me is definitely bearish with the next possiblity and analysis being a run for and test of 1163. It will be interesting to see how the volume comparison is at that time and whether it means more selling or a bounce and reverse head and shoulders pattern.
For the S & P to avoid a bearish monthly MACD crossover, it is going to have to pull a rabit out of the hat going into the end of this year.
P.S. An interesting side analysis here is the way this could play into the gold market. SOMETIMES the gold market moves inverse to a bearishly moving broad market as a hedge. An extra bearish broad market could further support some of the bullish gold clues I alluded to in my previous post on the Gold Market.