$SPX: Volume and Momentum Issues


When performing index analysis, I normally prefer to use the SPDR because that is the trading vehicle, as well as a "total return" view of the index. In this case we are looking at on-balance volume (OBV), and I wanted to be sure we were considering all the volume associated with the index, not just the volume of the SPDR.

As the rally from the November low progressed, I noticed that the OBV was moving sideways rather than moving up to confirm the rally. I was a little wary of this analysis because volume tends to be low during a holiday week; however, except for the last two trading days, volume has been quite robust, staying right around the 250EMA of volume. Strictly speaking, a true OBV non-confirmation occurs when price puts in a higher top that is accompanied by a lower OBV top, but in this case I thought that the disparity between OBV and price was so pronounced that it was worth a mention.

In addition to the OBV problem we can see that the PMO (price momentum oscillator) is topping below the signal line, always considered a bearish sign.

Taking a quick look at the SPY chart, we see similar readings, except daily volume has been substandard, running well below the 250EMA for almost two months. This is why I thought it better to focus on $SPX volume.

CONCLUSION:  The S&P 500 Index is not far from making new, all-time highs, but OBV and PMO configurations are bearish. While this could be the beginning of a longer-term breakdown, I should emphasize that these problems only have short-term implications at this point. An extension of the current rally once post-holiday trading resumes could erase these issues rather quickly. For now, these are caution flags.

Technical analysis is a windsock, not a crystal ball.

Carl Swenlin
About the author: is a veteran technical analyst who has been actively engaged in market analysis since 1981. A pioneer in the creation of online technical resources, he was president and founder of, one of the premier market timing and technical analysis websites on the web. DecisionPoint specializes in stock market indicators and charting. Since DecisionPoint merged with in 2013, Carl has served a consulting technical analyst and blog contributor. Learn More
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