S&P 500 - October 13, 2010

Volume!

I saw volume!

I usually say that I can use an indicator of my choice and give you an analysis of your choice – doesn’t matter what you want – perma bullish up & up to infinity and beyond, perma bearish Hindenburg ablaze end of world is nigh, or something sideways in one time frame or another.

Perma bears have been telling us about lack of volume so often since March 2009 that it is not even funny. I have said at times that volume may not be an essential component in the beginning of a move as many will just be suspicious. Eventually, it will dawn on many that the thing is really happening against them, and you may see a return of volume. That is, IMO, time to perhaps start getting cautious. Also, since March 2009, every rally has been driven by breadth expansion and this one is no different. Breadth has been what we have been discussing a lot more than volume.

Today’s NYSE volume spiked up and came above average. Does it mean that it is time to go gong-ho long after missing out a ride from 1040 to 1170? I leave it up you to answer that question.

We pay attention to host of indicators. Price is the most important, and the rest are all there to help sharpen the analysis.

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A good day, wasn’t it?

So, where did S&P close for the day? Common friends, you know the answer – below the mid-line of the blue channel, of course :-)


Index has kept it within a tight corridor beneath the mid-line. This is typical of aggressive dip buyers and powerless shorters.

It’s becoming hard to find a stop on the daily chart that would not involve some 20-30-point drop. MAs are fanning wide. RSI is making it into the overbought areas. If I were forced to pick a first level of concern off the daily chart, I would pick 1156-1160

Daily breadth was good. Daily volume spiked above average


Index is now above the flash crash high. Some believe that it would be a level of overhead supply and now we are past that. I really have no opinion there and am just mentioning what I see and hear.

McClellan rose a bit


Broader, or longer term measures of breadth, like Summation, are positive and that can be supportive of price, but lagging McClellan’s can hint the possibility of a correction.

Same thing with NDX


As I mentioned BMO, NDX had a run at April high


This, for me, eliminates a 3-of-3-of-3-of .... perma bearish count on NDX. We may be having a strong wave B up, but the drop from April 2010 can hardly be counted as a wave 1 down. Let’s see if NDX can hold the 2007-2010 downtrend on when and if it pulls back.

This is a 60-min chart


I was asking for momentum expansion and we got that today.

We have many unfilled gaps on the way up. I am showing a bullish count here. There can be other counts as well. I won’t hesitate to change the count at the first sight of trouble.

I am raising my top level to 1165. After that

1150

1134

1120

OEW pivot support at 1176 and 1168. Pivot resistance at 1187 and 1219.

Long term trend is up. Mid-term trend is up. Short term trend is up.

Have Nice Day!