On December 15 a “Buying Climax” day occurred. A “Buying Climax” day is a when
volume jumps 20% or more compared to days around it. It stops the rally for short term.
A test of a “Buying Climax” day high on lighter volume and close below the “Buying
climax” day high triggers a “Sell signal”. A “Sell signal” on the SPX was triggered by this
method on 12/18. A bearish Candlestick pattern called a “Rickshaw Man” (which also was
a “Buying Climax Day”) appeared on 1/3/07. High volume days are always re-tested and
we expect the “Buying Climax Day” high of 1/3 will be tested also. Next week is option
expiration week which usually has a bullish bias. Another test of the 1/3 high near 1430
could be tested during option expiration week. If the test comes on lighter volume
another “Sell Signal” could be generated. We are short the $SPX at 1381.95.
"We are short the $SPX at 1381.95" Ouch!
Tim has a similar chart on the link at New Market Analysis Area.
Notice the new CLOSING high on lower volume Friday.
But no sell signal.
http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=1&dy=6&i=p55228913142&a=94947965&r=5077.png
