Low SPY Volume At New Highs A Possible Concern

Last week I showed a study that suggested the 1/18/11 move to new highs on strong volume suggested more upside was likely in the next couple of weeks. Despite a quick initial dip, the market has recovered nicely and is again making new highs. But this time the volume is dropping as we go higher – the last 2 days if you use SPY volume as a proxy. We’ve now had two consecutive 50-day closing highs and seen volume decline both days. This pattern was identified by the Quantifinder and I have updated the study below.

The stats table appears to suggest a relatively mild, but consistent, downside edge. The bearish influence is primarily exhausted within the first two days, though.