Monday, February 4, 2013

Price/Volume Diffusion Index - Feb 1st Edition

The price/volume diffusion index ticked up again through the end of last of week. As of February 1st, the diffusion index was 63.9, more than a points better than the 62.6 in the week ago period. This is largely on increased volume levels as the price of the S&P 500 rose.


This is while the rolling summation of the indicators continues to chug higher.


In my opinion, a price/volume diffusion index over 50 and and higher summation indicator points to a continuation in the recent equity rally. That said, the slope of the indicator remains below the previous peak.


This in conjunction with a flattening trend in the diffusion index suggests to me that the rally may be entering the stages. You should also be aware that the market is trading into downdrafts previously recorded back on November and December of 2007 of more than 300M shares (on the S&P 500 spider, SPY). This compares to volume levels in the 130M to 150M range presently. To me this suggests there is not enough demand to sustainably push markets higher. 

No comments:

Post a Comment