Low Volume Reversal for S&P 500 INDEX (SPX) Says Market Timer Frank Kollar
September 12, 2008 (FinancialWire) (By Frank Kollar)
Thursday's late session rally for the S&P 500 Index (SPX) constitutes a bullish outside reversal for this key big cap index. But we are not convinced the rally will last for very long.
The reversal day was accomplished on very low volume, indicating it may very well be nothing but a short-covering rally. Such rallies can suck in those who see the potential for a fast profit, but who do not see the underlying weakness in the rally.
Another warning can be seen in the CBOE Volatility Index (VIX) which closed at 24.46 and has not gotten more than a fraction above 25.00 in the entire September decline. Typically a VIX in excess of 30.00 and or better yet above 40.00 is needed to signal a bottom for the stock market.
The stock market needs to follow-through to higher highs on increasing volume before a bottom can be confirmed.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
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