The stock market has hit another new high. As investors make buy, sell or hold decisions, they may want to note that this rally is of low conviction. At The Arora Report, we have reached this conclusion based on our proprietary algorithms. However, investors can easily reach the same conclusion although with less certainty, by simply looking at the volume.
Let us start by looking at the annotated chart of S&P 500 ETF [s:SPY].
Here are five key observations from the chart.
- As the rally has progressed, volume has mostly stayed below the 50 day exponential moving average (EMA).
- Yesterday volume dropped off further to one-half of 50 day EMA.
- The breakout from the first resistance was on low volume.
- Rally started with decent volume before the volume fizzled.
- Volume was extremely strong on two distribution days before the rally started.
Dow Jones Industrial Average Components
Ten of the 30 Dow Jones Industrial Average Components are rallying with very low conviction. These DJIA components are Apple AAPL, Boeing BA, Chevron Corporation CVX, Du Pont DD, General Electric GE, 3M Company MMM, Nike NKE, United Technologies UTX, Visa V, and Exxon Mobil XOM…Read more at MarketWatch
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