Tuesday, July 07, 2009
Testing the May Lows
Note the head and shoulders pattern in the S&P 500 Index (SPY) that has received much recent attention. The 20-day volume-weighted average price (blue line) that had acted as support during the rally became resistance during the recent upmove. Now we are testing the neckline of that head and shoulders pattern. Interestingly, I show 227 new 20-day highs among NYSE, NASDAQ, and ASE stocks today against 972 lows--fewer new lows than we saw yesterday. If those new lows don't expand with continued selling today, we could trap a few bears looking for a breakdown of that much noted pattern.