Here is a 60-minute SPY chart (click to enlarge):
Last week’s rally (marked as “B” on the chart) looks similar to the rally that began on October 16th (“A”). Both have patterns that sort of look like the bearish rising wedge pattern.
The purple line across the volume bars is a 5-hour moving average. Note the declining volume as each rally proceeded. Both of these rallies look like classic, short-and-sharp bear-market rallies where excess short interest is rapidly burned off.
The McClellan Oscillator is now more overbought than it has been since February. So, it looks like a pullback is in order, especially with Friday’s jobs report looming.
SPY spent a good deal of time trading in the 88 area recently, so perhaps that is a good target for a pullback if one is in the cards.
Notice how volume accelerated on the pullback that began on October 22nd. That’s a hint that the bear is still alive. If prices fall this week, the bulls can score a victory if it happens on light volume.
What an interesting chart!!! Wow!!! Thanks for it. Makes me sleep much better with all my little shorties under the pillow.