The SPY ETF got some bearish downside continuation today from yesterday’s key reversal day on heavy volume. The bulls tried to get a rally going many times throughout the day to try to create a price swing reversal bar but failed to accomplish anything meaningful by the close.
Volume came in heavy again on the downside on the SPY ETF at least relative to the upside volumes we have been getting over the last month or two.
Tomorrow’s action is key because it will create the closing weekly price bar on the SPY ETF, and if we close near the lows tomorrow or at least have a decent down day then it will create a bearish looking weekly reversal bar which will be the first one since June 14th, 2009, the time period of our last more extended correction.
Then next week the first three trading days of the week will finish off September and will create the closing monthly price bar on the SPY ETF. If we get enough price destruction the next 4 trading days then it may even set up a bearish looking MONTHLY price bar on the SPY ETF which could potentially signal more bearish continuation into a good part of October.
I suspect this will be the case because I am already seeing the bearish divergences play out and generally the price destruction starts slow and then gets to an acceleration point after the bulls finally give up. But we will have to see how the weekly and monthly price bar closings come in during the next 4 trading days.