Here are three separate charts of SPY constructed on three different intraday time frames -- an hourly chart, a 2-hour chart and a 4-hour chart. If you’re viewing an hourly chart, this simply means each vertical price bar represents one hour of trading.
Each chart has a price moving average of 20, 50 and 200 (all simple moving averages) in the price pane. Our Time Segmented Volume (TSV) indicator (along with a moving average) is plotted in the center pane and a Worden’s Stochastic in the bottom pane. My indicator parameters are exactly the same on all three charts, but are obviously dependent upon the individual time frame. For example, the price moving average with a period of 50 (cyan line running through price) is a 50-hour moving average on the hourly chart, but becomes a 100-hour moving average on the 2-hour chart and a 200-hour moving average on the 4-hour chart.
Hourly chart observations: Perhaps the most obvious observation is the recent violation of the 200-hour price moving average (white line) and SPY’s apparent failure to move back above it. This price action comes in conjunction with a deteriorating TSV. TSV is below the zero-line, its moving average is below the zero-line and in recent days TSV itself has failed on two or three tries to move back above its own moving average. The Worden Stochastic is pinned down in deeply oversold territory, which suggests to me extreme price weakness.
2-hour chart observations: This pullback in price has run deeper than what we’ve seen over the past two or three months. A test of the 400-hour moving average now appears likely, which is something we haven’t seen since March. Both TSV and its moving average are below the zero-line and moving down. The Stochastic has just begun to dip below the oversold line. It suggests weakness and I believe is likely to sink lower with price.
4-hour chart observations: Price has moved down through its 200-hour moving average, albeit by a small margin, for the first time since the positive crossover in mid-March. TSV has lost some of its strength this month when compared to March, April and May. TSV has moved slightly below the zero-line just as it did last month, but when this occurred last month price managed to successfully hold at the 200-hour moving average. To further elaborate using a comparison of these same two points in time, note that our Stochastic has slipped lower and is now at a level not seen since the rally began in March. Yes, we need to see some additional follow-through in selling pressure, but I don’t think it is unreasonable for this pullback to reach a target in the area of the 800-hour moving average (white line).