SPY Observation

Notice the SPY chart above. The last 4 up days up days were on declining volume. Typically, I would sell into a move like this assuming that the up days were on declining volume which signifies contracting demand. However, this might not be the case here, if you observe more carefully you will notice that the rise was on extending ranges which is a revelation. The extended ranges could mean that its not that price found no demand hence the declining volume but that price found no supply as prices exploded higher and higher without faceing any counterforce to send it down.

Yesterdays inside day was also interesting. Sellers could send prices anywere as buyers maintained control, it is important to not however, that price is currently at a resistance zone and a breakdown from the inside day could find continuation to the downside.

Levels to watch are the 134.00 level, it is important to watch this level as prices has always struggled here in the past. This and the fact that the inside day's high is at the same level, which could pave the way for an explosive move. 133.50 is also key here, as a breakdown down from this level is significant. It is so because the level is the inside days low and because price is at the top of its range for the past 6 months, this range has proven to be resistance in the past and could push prices lower again. It will be interesting to see how price reacts from here.