The S&P500

After reaching a new all-time high ( ATH ) on Tuesday, the SPY corrected strongly downwards after the FED FOMC minutes of December were published. It fell back to its support level of around 467.8. The yellow and blue bars on the right side of the graph show ‘volume at price’. This means: the amount of volume traded at a certain price. I use this metric to determine support and resistance . At peaks of ‘volume at price’, you will usually find resistance or support and peaks or throughs.

In one day on Wednesday, the SPY fell back to its first downwards support level . The bar for Thursday in not very visible on the graph because it is a Doji . A Doji is a candle stick where open and close are almost exactly the same and hence the body of the candle is thin. Dojis signal that the Bulls and the Bears have been fighting for control. It usually signals a short term trend change under the condition that volume was high which it was in this case. However on Friday, the S&P500 corrected with another 0.4% downwards but remains at support so far. It is also touching the 50 day moving average which usually acts as support. We will see whether it can hold up at this level or not. Another 2 to 3% more correction downwards would not be out of the norm. At that point, the index would be at its mid-term support (green line on the graph)

So, although nobody enjoyed the market action of the last couple of days, it does not yet look out of the ordinary. There are no warning signs yet that this market will turn but expect more volatility next week.