Regardless of what time frame of a chart you're looking at, textbook tape reading tells us that volume can confirm whether we are in a trend or a counter-trend environment. If we are trending we should see volume consistently rising. If we see price rising while volume is dropping off, we suspect we are in a counter-trend move. If you're looking at a 1-minute chart or a daily chart, if you see a big drop in price on large volume, you are likely to see that followed by a retracement higher on lower or declining volume. Well, by the looks of it, I still maintain that this has been the mother of all counter-trend rallies:
The SPY couldn't quite tag $100 today, but it got close. Just before 10a.m. we got a little flag pattern on the 1-min chart to jump aboard this move. I was suspecting a possible target of $100, but we pooped out (technical term) on the 3rd push, unable to find a bid.
The move off of the highs came right down into our lower keltner channel band. I have got to start playing these counter-trend moves. Maybe half a position with a target of at least the mid-line (20EMA) and a tight stop to try playing for the lower channel band. At any rate, we couldn't get anything going later in the day, so we sold off of our base and back down to the opening lows.
I was watching RIMM today with my Support and Resistance levels mentioned previously. $76.93 was the line in the sand for today. It tried breaking out with quite a large move, but was quickly sold off (again, down to the lower keltner channel band!). On two more occasions throughout the day that $77 level was key resistance and we got another nice sell-off into the close.
I look forward to how the bulls respond tomorrow!
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