Reading the equity tape

The money flow setups in the dollar index, S&P 500, gold and silver continue to suggest another wave of devaluation is coming. This implies a lower dollar, higher gold and silver, and likely higher stock prices as illustrated by the Weimar Republic.

COT Money Flow Table:


Nevertheless, the equity tape has showing signs of weakness since the October breakout. The following chart illustrates this point.

SP 500 ETF (SPY)


The October breakout has been twice tested on significant increases in volume. Increases in volume at critical support suggests increasing downside force. This condition often implies a future retest of this zone. The most recent test in February came on nearly 500 million shares. This was a significant jump in volume from the breakout gap and first retest in October.

Also the February breakdown gap (yellow) was closed on a big contraction of volume. This implies a false breakout. The decreasing force as price finds overhead gap resistance (white) only reinforces it.

In general, the equity tape has shown greater force on the downside than upside. A classic illustration of a weak upside tape.