Volume Analysis and 2009 top warning?

Update July 29 2009: Volume is now at a level that previous tops have occurred. This may be a warning that going long right now is a risky endeavor. Click on blog post to see updated chart.

Attached is a volume chart I created to spot tops and bottoms during the 2008 bear. I decided to update it thru today to see what it shows...

As you can see since late March the volume of the total market has been declining as price went up. This is not a good sign for the market. Sustainable rallies occur when prices rise on increased volume, not on lower volume. What this is showing is that more people are losing interest as this market climbs and that any decent sized wave of selling can take the market lower pretty easy.

During the 2008 bear previous tops were confirmed when the 10,12, and 15 day moving average of volume approached the 1200 level on this chart. Unless volume picks up in the next few days as the market rises, we may be in a topping process right now.

On a positive note, in Early March the rally produced volume that was consistent with all the major down legs of 2008 (hitting 1900) showing that the rally was for real.


Watch the 1200 level on this chart. If prices start to fall as this volume curls up below the 1200 level, the rally may be confirmed over.

The title of this blog links to the live chart...