Stock quotes in this article: COST, AAPL, SPY, QQQ, DIA
In this daily bar chart from the DIA, below, we can see that prices bottomed out in June and a shallow retest in July. Prices continued to rise in an increasingly tight trading range. So far, DIA has not hit its June highs.
Trading volume dwindled from mid-June onwards and for old chart readers like me, this is a problem. Trading volume should increase in the direction of the trend to give us confidence in the progression. That’s not the case here.
The daily On-Balance-Volume (OBV) line shows a decline in July and only a slight improvement. The Moving Average Convergence Divergence Oscillator (MACD) is above the zero line but could turn lower in the days ahead.
In this daily SPY bar chart below, we can see the same rising wedge pattern we described for the DIA above. Here, the SPY pushed higher until the peak in early June. Prices are trading above the 50-day upward moving average line, but remain below the 200-day downward moving average line.
The OBV line is struggling to improve and trading volume has been declining since mid-June.
In this daily bar chart of the popular QQQ, below, we can see the same rising wedge pattern, but here the QQQ has broken above its June high and some market watchers have turned bullish. Still, the trade has been declining since mid-June and that is not bullish for me.
The OBV line for the QQQ is more positive than for the DIA and SPY but this is not enough to recommend buying.
Receive an email alert each time I write an article for Real Money. Click “+Follow” next to my signature for this article.