The stock market closed decisively in the black today but on volume 20% below average. While more volume would have added confidence, we cannot ignore the positive move because it occurred after a volume spike last Friday.

The Dow closed up 0.63%, the NASDAQ 0.50%, the NYSE 0.40%, and the S&P 500 0.54%.

Here’s a chart of the S&P 500:

The current trading channel is marked by the blue lines and shows where the S&P will likely bounce between.

Take a look at the end of May. There was a volume spike followed by a large drop in prices that set off the correction.

The major difference between then and now is the lack of volume and decisive gains (>1%), but this could still be a turning point in the correction.

I wouldn’t be surprised if prices continued sideways for a bit as we have now seen some demand in the markets.

Watch for another test (prices moving into the bottom of the trading channel on low volume and closing near highs for the day) in the near future and see if more demand enters to push prices back up. I’ll keep you updated when it happens.