Swing Trading Strategies & Stock Picks Since 2003

Let’s take a holiday look at the current 60 minute chart of the SPY - the S&P 500 ETF to see a new upward sloping range along with volume and momentum insights.

The trading range on the intraday charts has taken an upward slope as revealed by the two black trendlines I’ve drawn.

Interestingly enough, price broke outside the upper boundary line on steadily declining volume… but such is the expectation of a holiday trading week.

Markets can inch their way higher on low volume as sellers stand aside or take early vacations.  That leaves buyers and resting stop-losses of the short sellers above these critical resistance levels.

It’s my assumption - so far - that this up-move is a standard holiday seasonal rise that most likely is being fueled by the “Popped Stops” phenomena.

See my prior posts for a description of this concept:

“Knock, Knock, Knocking on Fibonacci’s Door”

“Critical Weekly Resistance Levels to Watch in the NASDAQ, Dow Jones, and S&P 500″

“Recent Bull Traps and Sell-offs in the S&P 500″

“New S&P 500 Highs Forecast by Fifth Sprung Bear Trap”

“A Look at the 12 Most Recent Failed Sell Signals in the S&P 500″

Remember that the stop-losses of the sellers/bears above key resistance levels often ignite the fire for a continuation move IF buyers also join by pushing prices higher as key resistance is cleared.

If what we’re seeing right now is merely the buy orders of the “buy to cover” from the shorts, then this breakout will be short-lived.  We’re seeing a declining volume line indicating this possibility.

If we start to see higher prices on progressively higher volume, then we can trust that this is a true breakout above key resistance levels, and not just a seasonal holiday ‘bump.’

Enjoy the holiday weekend but watch the market very closely into the end of the year and more importantly what happens early in January 2010.

Corey Rosenbloom, CMT
Afraid to Trade.com