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SPY Rally: A Junk Technical Rebound ?
October 12 ( From Stockcharts, TradingView, SPDR.com )
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We just start to realize how deep and violent the correction was on the US
equity market lately. From the peak price on SPY ETF reached on May 20 2015
at 213.78 to the low made on August 24 at 182.40, for a move of 14.68%...
That was the first serious real correction since October 2014...
In fact, when we broke a Rising Wedge Pattern on August 20 2015 at 205.94,
game was over on SPY on a short term basis and then reached then the panic
selling level on August 24 at 182.40. ( See Chart Below - Blue Trendlines )
Rebounding from those abyssmal technical levels was quite a statement from
We did on September 29 a technical test of the Daily Low of
August 25 (186.93) and rebouded violently. It was a double bottom and the market
rallied and for the first time since August 24, and it did with stronger volume.
But in reality, it was a pure Technical Dead Cat Bounce coming from only
3 SP500 sectors since September 30 as shown by the second chart below:
1) Energy Sector up +7.7%
2) Materials Secvtor up +5.6%
3) Industrials Sector up +2.0%
ETF s volume account now for more than 15% of total volume on
exchanges. It now influence tremendously the market
making new highs or new lows.... We must follow now
the ratio of
the ETFs Advance Volume compare to the ETF s Declining Volume
to the US Stock Market. In fact, the last time we had the 7 DMA of that ratio at that Overbought level was back on February 13 2014.
Another way to look at it is the Swenlin Trading Oscillator Volume Index from the above mentioned sectors and SPY; ( see third chart below). It shows an Overbought situation not seen since December 2013!
Is this only a dead cat bounce from those 3 sectors or a more sustained rally? We still don t know but what I know is that short term indicators are into the overbought territory and what is leading the charge til now paints a less rosy picture than the Mighty SP500 Index is showing...
SPY Rally: A Junk Technical Rebound ? $SPY #Trading #Emini #investing #SP500
SPY ETF ( Daily Candles )
Volume ( Bottom Panel - Blue Area )
SPY ETF Sectors Performance
since September 30 til October 9 2015 ( Bar Chart )
Swenlin Trading Volume Oscillator - Daily
XLE - Energy Sector
XLB - Materials Sector
XLI - Industrial Sector
SPX- SP00 Index