In follow up to my blog earlier this week let’s take a look at a weekly chart of the S&P500 index. The S&P 500 index is made up of stocks that represent a broad segment of the stock market. At market tops there is usually an increase in volume as stocks attempt to rise above earlier highs but are unable to do so. The bars at the bottom of this chart represent the volume and you will also see the months and years. Notice how the bars begin increasing in August 2007. Look above the volume spike in mid August and see how the S&P index is going to make one more attempt to go higher than the early July high. It succeeded but that was the last new high. Notice that volume continued to increase on the way down as the new highs were lower than the last high and the selling intensified. At the same time new lows were lower than the last low first in March 2008 and then in July 2008. These are technical indicators of a change in the overall stock market trend from up to down.
Yes hindsight is always 20-20 however I do find this chart telling. The trend change did not happen overnight it only felt that way. It happened over more than a year.
There are many more indicators but this is a very simple start. If you would like to learn more about technical indicators I am considering a teleclass on this topic. I would love to hear from you regardless as I love hearing from other women interested in investing.