Monday, July 16, 2007

On Balance Volume Divergence In The S&P





Above is a daily chart of the S&P (SPY). As you can see this last push up to new highs was not confirmed by the on balance volume indicator. If you look at the actual volume itself you will see that this rally has been on declining volume.

I personally am not looking to short this market because the trend is up and being long is what's been working not shorting.. I actually was long last week and exited on Friday's close.

I think I would use the above chart as a sign of caution to maybe lock in some profits on your longs or tighten up your trailing stops. Keep in mind last month the Q's showed a bearish divergence between price and the OBV indicator and the NASDAQ rallied anyway.

Like I said, use the above chart as a sign of caution to protect some profits if you are fortunate enough to be long.

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