If you look at the bottom of the daily chart below you can see that I have added some annotations and shading to highlight where there are spikes in the daily volume well over the average. I mark these up because these volume spikes occur at, or very close to, reversal areas, and the last two days have generated these spikes. I’ve looked at these in 2008/9 and the main differences in a bear market/crash situation were that the average volume was higher, and it often took more volume spikes to turn in very strong moves. Volume spikes like this will generally deliver a swing low within two or three days. That might just deliver a rally, but to just keep running lower would be a rarity. That is the overall context today. SPX daily chart:
Shorter term the falling wedge on SPX has clearly evolved into a falling megaphone. The obvious next target within that megaphone is megaphone resistance in the 1890 area, with a lot of other resistance around it such as the 5dma, the 50 hour MA etc. A break above this resistance should signal that at the least a swing low is forming, though as ever the low could still be retested. If we see a retest of yesterday’s low directly from here then that would likely deliver a marginal new low setting up a very possible double bottom. SPX 60min chart:
I’m leaning towards that 1890 test area initially today, with a probable fail there as Stan & I don’t think the swing low is in yet. We may be wrong though & if SPX recovers back over 1900 with any force then most likely we are. If that resistance holds I’d expect at least a retest of the lows from there.
