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Nov 22nd, 2009: Daily RSI and Volume Indicators

Posted by pugsma on November 22, 2009

There are couple things to take note of from last weeks 3-day selling action.

  • Selling volume was very light.  Much lighter than during the start of the Wave [4] correction in late October.  There will likely be light volume next week and into December and this typically will support a bullish move.
  • The RSI has re-set to a near a neutral position of 50 without a touch of the long term July-Nov trendline.  The Daily Relative Strength Indicator (RSI), has shown negative divergence with respect to upward price action since the wave 1 of [3] large move in July-August.  The RSI can support one more move higher towards 65 to 70 for a wave [5] top.  After that, the market needs a rest and the RSI should re-visit the 30 area in the P2 correction that follows.

Overall I see a bullish conclusion to November.  We could see 1120 by months end and 1140 in early December.  However, if  there is further weaknes on Mon-Tues Nov 23-24th, then look to the 1070 are for the next support.  And below 1070, then look to 1050 support (which brings my alternate count into play).  There is a key SP-500 Month 20-period SMA set at 1040.  If November closes above 1040, it’s another indicator of a new cylical bull market that could last for several years.

SP-500 Chart with Daily RSI and Volume Indicators:

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