S&P - Broadening Formation

Discussion in 'Technical Analysis' started by circadian, Jul 22, 2009.

  1. After the failure of what could've been the most anticipated/watched sHs formation, it seems as though we're seeing the development of a broadening formation.

    Is this a broadening TOP? It's hard to say here, especially in light of all of the upside juice being provided by earnings management, and timely upside market forecasts being provided by GS.

    I'm still baffled as to how exactly the market can continue to rally in light of a multi-month negative volume divergence and lack of corporate revenues.
  2. I dont expect this rally to hold on for much longer. We should see a retracement to the downside once retail figures next month show lack of bullishness. Ppl just dont have the income to drive it where its needed. Seems alot of people are getting mesmerized by these corp. earnings calls and creating hype to pump up the market when the fundamentals still show otherwise.

    Then again, I dont really try to look that far into the future since im a short term/scalp trader. :cool:
  3. Eight


    It's up on lack of sellers, if sellers come in it might not be too difficult for them to drive it down...
  4. Of course, I agree and understand. I'm just amazed at how long this has gone on (decreasing volume trend). Since the March bottom, the volume has been slowly waning. That's over 4 months (and counting) of decreasing volume/increasing prices.

    At this point, it might only take 3 consecutive down days, tallying 250 million shares a day would put this market on its back. With all of this light volume, I can't believe that we haven't had ourselves a significant bear raid.
  5. LOL....... Isn't there a seller for every buyer?
  6. Eight


    uhhh, yeah, correct.. I think of "buyers" as buy volume and "sellers" as sell volume.... I'll be doing Yogi Berra impersonations here soon...

    Obama probably has short sellers bound and gagged in the White House basement...
  7. Hit the upper boundary of the broadening formation at around 1:00 pm CST today. I know that we should see some hesitation for a few days, as late buyers show up a day late and a dollar short. I'm very intruiged here. It's either back down to 880 S&P, or up and away to 1090.
  8. position or swing shorting in the summer and earnings is a no no no.

    daytrade only.

    once earnings season is over, these shareholders will find no buyers. Market makers are propping up the markets as there are few sellers now.

    volume is so low it doesn't take a lot of money to move the market a few ticks.

  9. Well that's all good and fine, but since the credit crisis first arose in the summer of 2007, these negative volume divergences have resolved themselves in similar fashion. I hope I'm wrong, as I'd like to see this economy back up on it's feet, and I don't think that'll happen if we have another significant market breakdown.

    Linear regression study of weekly SPY negative volume divergences:
  10. ammo


    thanks for that chart circadian
    #10     Jul 23, 2009