That Was The Week That Was – Volume Spread Analysis of S&P 500 16/12/2022

Welcome to another weekly review of the S&P 500 and let’s have a look at the trading action of last week. I did mention in my previous article that we could most likely test the upper trend channel and we can see that occurred last week. We came down towards the support level and then on Monday we had an up bar.

S&P 500 Daily Chart

Then Tuesday, we saw a up-thrust. An up-thrust is a major sign of weakness and it’s to fool the retail traders into going long. The professional money have certainly pushed prices up, broken through that resistance level that and traders would have looked at that and said, okay we’re breaking a resistance level and maybe we should jump in. Right after they jump in, negative news come out about inflation, interest rates going up all that negative news and we saw prices quickly drop back down and closed towards the lows.

That is a classic up thrust and its to fool the retail traders into going long. The following day we saw a confirmation of that weakness and we progressed down and finally on Thursday, we broke through that support level around 3900 a key level.

Friday is a very interesting bar. We see an up thrust type bar right but this is closing more towards the middle of the range but if you have a look at the volume the volume is the biggest volume for some time, it’s nearly ultra high. When we see very high volume on a down bar with the bar closing off its lows, we are starting to see strenght enter the market

Don’t forget we’ve broken through a support so it could be a fake out or genuine selling. We need to wait for confirmation, What is going to happen on Monday is very critical. If we get that continued selling then we are going to come back down towards 3700 and 3600 that’s where high volume is present.

If we witness a turn around in price then that bar on Friday is strength and it’s buying from the professional money.

S&P 500 Weekly Chart

The weekly chart shows a bar that I like to refer to as a trap up. Prices are marked up and they slam the price back down. There is no sign of weakness signal, but it’s a bar similar to a trap up move. On the weekly chart, we do see weakness. Wwe’ve tested that resistance point in that upper Trend Channel and now they’ve slammed prices down we’re broken through the consolidation range.It’s just looks like like we’re going to see a bit more weakness.

All the talk of inflation, rising interest rates and a recession is causing the market to be weak. I will not be at all surprised if we return to 3600 – 3700 range, the area where there is ultra high volume. We could also return back down to the lower trend channel of around 3400.