The market rolled over in yesterday's trading, with the S&P 500 falling about 40 basis points in value. The value decline was largely a result of declining prices in all but the lowest weighted sector groups in the market.
Although the market lost value yesterday, I contend that the equities are not ready to roll over just yet. This is as yesterday's decline occurred on lighter volumes, relatively speaking and as my price/volume diffusion index remains above the 50 demarcation. The latter indicates equities prices exhibited upward momentum and the rally that began in early June may continue to run.
That said, I also firmly believe that the rally in running on air, as the volume levels indicate low demand lows for stocks at these elevated prices. This is also while fundamentals remain weak. The price/volume heat map in yesterday's trading reflects the price declines in the sector groups. Telecom equities were the strongest on supply/demand basis while materials and utilities showed weaker price/volume characteristics relative to price moves.
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