We may have a short term sell signal developing right now in the SP500. So far today (we are at half way through the trading day) we have gone high enough to test the price swing on the SP500 of June 11th. Price has retreated since we hit the high, although modestly. So yes there is still time in the day to get a close above that high, we will have to see by the end of the day today.
But the key is to analyze the NYSE volume on today’s swing and the June 11th price swing. I have had a problem getting accurate volume on the NYSE but I am going to assume that these numbers from Etrade are correct. On June 11th, 2009 we had volume on the NYSE of 1,222,787,600 shares. So far today we have volume of about 610,000,000 shares. We will have to see what the final volume numbers are today. But if volume comes in 4% less today or even less than that then we will have a short term sell signal.
Assuming we get that sell signal, then I see a possible target of 910.15 on the sp500 as we have a gap at that number and pretty significant volume of 1.374 billion shares. So assuming we get back down there I would expect that gap to serve as short term support.
So there are a lot of ‘if-then’ statements in the paragraphs above but that is because we are only half way through the trading day.
If volume comes in greater than or equal to the June 11th price swing and we close down today under that swing, then at least that tells me we should be able to break the June 11th price swing to the upside eventually, but short term can still retrace to the gap I just mentioned. If volume comes in dramatically less than that price swing, then we have a confirmed sell signal (if we close down today) and we will need to see how the market behaves on a test of the price gap of 910.15.
So that is the take right now but of course subject to change upon today’s close. Stay tuned.