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S & P - Strong Likelihood Of A Top. Market Weakness Grows

Tuesday Evening  16 November 2010

  Back on the 9th, we described the S&P encountering trouble, spelled 
with either a big "T" or a little "t." [See S & P - Tuesday Could Spell
Trouble
].  Turns out, it is Trouble with a big "T."  There was almost no
rally retest, at least in a way we expected.  Yesterday's wide range
sell-off on sharply increased volume, pretty much clinches the
November high as a top.

 Attention is drawn to the three consecutive days of high volume during the first few days of trade in November.  Note the corresponding price
activity.  The first two increased volume days were wide ranges to new
highs.  The third price bar, although volume was still at a high level,
had a much smaller trading range, and the net gain was not much,
compared to the previous two days' gains.  That was an important tell. 
Two days later, a new high, by only 25 tics, occurred, and that day
become an Outside Key Reversal day. [OKR, A higher high, lower low,
and lower close.]  This can sometimes just be  stopping action and not ending action.  It was not confirmed at that point in time.

 There is then another high volume day, higher than the previous three,
and it occurred the day after the OKR high.  The importance of the
increased volume is that it did not produce meaningful results.  It failed
to go above the half-way point of the OKR day.  The effort failed, and
price has since declined, and now with greater ease of downward
movement.  This is the largest move down since the lows of August.

 We have identified the 1120 area as a downside objective.  Depending
upon where the week ends, this price activity could also change the
weekly trend.  The objective now is to sell rallies into areas of resistance.

 

S&P D 16 Nov 10