Today's total volume is low compared to the last few selling down days, but the market breadth is pretty impressive. Above is NYSE "advancing volume to declining volume ratio" histogram chart overlapping with SPX index movement from 2009 March low.You can see the advancing to declining volume ratio has been continuously decreasing during wave (W) and wave (Y), the red solid lines and the red arrows. However, we had two increasing ratios in corrective wave (X), the blue solid line and two up arrows in June and July, which indicate the market still had some upward momentum.
Today, we got a higher high close reading 8.97 on this ratio, meaning advancing volume to declining volume ratio is almost 9:1. During the entire rally from March low, when we got this kind high readings, market always would follow through and keep going higher. But if the trend already reversed from 1080, it may not work so well.
Now the argument goes back to the wave count: did we top at 1080?
In today's session, SPX broke up 1041 and closed above 1040. It is a bullish signal, especially with a 9:1 up volume ratio. Based on my wave (i) low at 1041.17, SPX violated wave 4-1 overlap rule. There has been a debate regarding where is the orthodox low of wave (i). It could be 1046 or 1041, depends how you label the wave (ii). Also Dow and NASDAQ were lagging today and did not violate their wave (i) lows. So the wave pattern is not very clear at this moment and we have to give market a little more time, one more session or two, to show its true fave.
But again, today's 9:1 up volume ratio should not be ignored and it brought some caution on the bearish count. If 1046 is taken out to the upside, it will invalidate my current count.
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