On Friday of last week the bears finally had a nice day, beating the bulls in every sector. It was such a bad beating that Up-Volume was almost non-existent. For the second time in a month, the Up-Volume to Total Volume Ratio was .05.
The most recent time this occurred was Oct 1st,
here is the post about it on that day.
So now this event has a occurred 20 times since the 1980. Here is a list of how the SPX preformed after this event.
Now we can add October 1st to this list:
SPX 1 day after=-4.24
SPX 5 days after= 36.03
SPX 10 days after= 67.11
There is a good possibility of a market bounce from here based on historical moves after .05 up-volume day.
Another good reason to support a bounce is an over sold condition on both the hourly chart and daily chart.
On the hourly the Stoch indicator is nearing oversold but one thing to take away from the chart is the MACD indicator. Notice how it did not make a new low with the market on Friday, this is an example of a bullish divergence set-up.
On a daily time frame, stoch is also oversold, but not deeply oversold and can actually drop down more.
What will be key going forward to watch is SPX can first get back above 1047-1050, the bulls now have to get out of the bearish engulfing candle from Friday. But if the market drops it will be important how the market handles the 1025 level. It would form a double bottom at the level and may provide a bouncing point. The rally in earlier October started at the same level, after having a .05/.95 day. So keep a look out for this. But one thing is for sure, volatility is back and there may be more large one sided swings like this in the future.
