It has been a few weeks since I publicly updated my Price/Volume Diffusion Index. The diffusion index continues to increase, currently sitting at 68.3. The recent track of the diffusion index is shown below.
The Price/Volume Diffusion Index level remains positive, suggesting higher equity prices in the future. However, this comes with a note of caution. The index continues to tick higher primarily on the positive inputs through Feb 19th, as the the index is calculated using a one month look back. The Price/Volume Diffusion Index is in contrast to the rolling summation index, which has rolled over from Feb 19th high. The updated summation index is show below, noting the turn in the index over the latest week.
The summation index is rolling over as S&P 500 has been selling off on increased volumes in recent days. This is a negative event, in my opinion, as the sell off is occurring as the price of the S&P 500 rolled into the November/ December 2007 volume downdrafts. This indicates a significant supply line at these levels, and unless support materializes lower prices could be in the offing.
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