These volume spikes or blowouts are submission moves where bulls have experienced escalating pain as the market has plummeted. Ultimately the hurt becomes greater than they can take and they fling in the towel and sell producing a volume surge on the downside. Once the sellers are out of the market, and the shorts cover, the stock market is then able to move higher on lower volume.
We had such spikes at the beginning of May, June, and now in July.
When you examine the S&P 500 on the daily stock chart, you see a downtrend channel and that we are at the lower trend channel wall. But before we can gamble on a swing up, according to FTV, we need a close above 1036.
I disagree with FTV and the 1036 level. At 1040 to 1043 we have the major previous support zone. We know that support often turns into resistance on these kind of downward moves so it seems impractical to enter at 1036 when the bigger 1040 to 1043 resistance zone is so nearby. I deem that 1036 is a perilous, flip the coin way in. I choose to make this market prove the upswing is underway by a break above 1043.
If you look at the weekly chart, and learn by heart, the weekly chart trumps the daily chart, we had a break of the neckline last week on a bearish Head and Shoulders top. This is a precarious market and not one you should go long the S&P 500 in just for the reason that you might have a trend channel bounce up to 1036 on the daily chart.
However, I think this is a video that you should watch. You can seldom have sufficient stock market analysts opinions.
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