SPY printed a 4month volume high today, exceeding 300million shares traded. Without going into too much detail, let’s just say that the large volume days have predominantly been red for at least the past year. If you go back and look at the daily charts, you’ll see it started on October 30th, 2009. This is not good for longs, and is one of the main reasons why I am leery of this market. Every time there’s real excitement on the exchanges, it’s been to the downside. What are the circumstances by which we could see a 300million share bull run? I can’t think of any. Maybe if Osama Bin Laden was captured?
Looking at the SPY 30minute chart again, I could foresee a bounce back to $119.50 or so, but I think you have to view $119.75 as resistance now. There is always the possibility of an acceleration in trend, and so we need to also watch out for that. Markets grind up and then fall precipitously. If you think the flash crash which happened in May was a one-off event, you might want to think again. Volume figures have acted as a non-confirmation for quite some time now. A lot of people are looking to buy the dip at various 50day EMAs. We’ll just have to see how that works out.