Peter Worden's Blog

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).
 

SPY has moved several points higher since my post last week. Earlier today, SPY encountered some overhead resistance at its 200-hour moving average (orange line). Within the past hour we’ve seen price pull back and to a slight degree violate the lower confines of its minor uptrend channel. This is the first such violation since the minor uptrend began about a week ago.

Although TSV and MACD remain positive they are showing some subtle, yet growing signs of fatigue on this 30-minute chart. It appears SPY is in need some rest here, which is likely to involve a pullback of at least several points.

This 30-minute chart of SPY spans back about three weeks to February 23. I have drawn in some trend lines to illustrate the short-term upside reversal, which occurred on Tuesday’s open. SPY gapped sharply higher breaking through the downtrend line drawn from the Feb. 26 high. SPY is now in a minor uptrend which can be defined by my yellow trend lines. It is important for any pullbacks to hold at the lower uptrend line.

TSV (center pane) crossed up through the zero-line at about the same time price broke out earlier this week. The indicator remains in positive territory. I would like to see TSV remain above the zero-line and ideally above its moving average.

Worden Stochastic also suggests strong price momentum, as it holds in overbought territory. I would like to see this stochastic hold above the 50 level on any price dips within the up channel (yellow uptrend lines).

In TeleChart Platinum chat just a short time ago at 2:02 PM ET today I wrote, “I like the look and the feel of this rally.”

SPY has made a nominally lower low following the bounce attempt at the end of last week. As a result, my volume-weighted MACD gave us a head fake and our price bars went from green back to red again on this 30-min chart. Earlier today, SPY completed a successful test of yesterday’s close (almost to the penny) and has since pushed modestly higher. Notice the positive divergence which has now formed in TSV between Thursday’s low (Jan. 15) and today’s low. Price is now approaching a test of the 50-bar moving average, an obstacle which must be overcome if SPY is to carry beyond the highs of late last week.

Well, as bad as things looked yesterday morning, it was encouraging to see SPY hold support at the early December lows and put together an afternoon rally. This is the same hourly chart of SPY I showed you on Wednesday (January 14). Can you see what’s changed? My TSV (bottom pane) has crossed up through its moving average and done so with some authority. Granted, the indicator is still below the zero-line, but this suggests we saw a healthy surge of intraday buying. The price bars are still red because my Volume Weighted MACD (center pane) has not yet completed a positive crossover, though it’s very close. Price is now knocking on the door of its 20-hour moving average, which it has remained below since the downturn from the January 6 high. 

After moving sharply lower at the outset of today’s session, SPY did establish a trading range of sorts for the remainder of the day. In fact, SPY did actually survive a late-day test (almost to the penny) of the morning low. While this may suggest we are close to a tradable low, the indicators on this particular chart are still negative.

As you can plainly see, this hourly chart of SPY has been in a sell mode since January 6. Both my volume-weighted MACD in the center pane and my front weighted TSV in the bottom pane correlate quite closely with their respective moving average crossovers. I am watching this chart very closely right here for potential positive crossovers, which would signal the likelihood of a short-term rally attempt. I would also ideally like to see at least some basing action in price, much like we saw during the last week of December.

SPY has been riding along the top of its 200-bar moving average on this 10-min chart, trying to hold support throughout today's session. TSV has begun to show some subtle selling pressure today, which I believe suggests an upcoming downside resolution of the (200-bar) price moving average.