Notice the following.
1.) In the last significant move of 2003, 2004, 2005 and 2006 the SPYs broke through previous resistance levels on strong volume. While not all of the volume moving into the market at this time was up volume, the total volume and the corresponding price action indicates the bulls were in charge of these rallies.
2.) In 2007, the price action indicates increased volatility. For this P&F chart to print a new row prices have to move at least 4 points. In other words, there is a very big battle going on right now between the bulls and the bears that has not been resolved in either's favor.
3.) Notice there is incredibly strong resistance in the 156 and 158 area. In early 2007, the SPYs tried to advance beyond 156 twice and were rebuffed. The SPYs advanced to the 158 area later in the year dand couldn't move beyond. In other words, the upper 150s are an incredibly important area of technical resistance for the average.
4.) Since late August 2007, the SPYs have had a pattern of lower highs and lower lows. The move has been gradual, but it is there.
The price action in 2007 is what concerns me the most, especially when compared with 2005 and 2006. In those two years the market had at most 4 simple price trends. In 2007 we have a jumbled mess. The recent declining action and increased volatility are also a concern.
Now, this isn't a bad chart, but it's not a good chart either. It tells us the market is looking for direction but hasn't found one. It also tells us that traders have more of a hair trigger right now as evidenced by all of the volatility. But prices haven't dropped hard in comparison to previous advances.
