Tonight I thought we would go over the intra day snp chart, 5 min, for the past few days as I believe there is evidence of a significant turn. First let us look at the daily Spy chart. As i previously pointed out, the volume was diminishing on each successive day that prices rose and yesterday we made a new high on markedly lower volume. Today prices turned down and for the first time in this trading range the volume increased. In other words, demand had petered out and today supply controlled the market and prices fell. We can see the same thing on the intraday chart of the e mini.
After the fomc meeting price and volume rose sharply. We see two successive trading ranges both with high volume followed by a breakout on the highest volume of the day ending at 3 pm(on the 5 min. chart). Even with the very high volume we could not muster a close above the trading range beginning at 2:25. Supply was entering and overcoming the demand generated by the news from the fomc meeting. This was further emphasized in the bar ending at 3:05 with its low end close and high volume.
Not surprisingly prices opened sharply lower the next morning. We found support at 894.50 and ground higher on a fraction of the demand we saw Tuesday. Eventually we upthrusted Tuesday's high with no substantial short covering or new buying interest.We fell back slightly and again attempted to rally on even less volume. This ended with a reversal bar at 1:20 and in the next 25 minutes volume rose, and we reversed the the 90 min of grind upwards to the day's high. The ease of movement was down. We rallied on sporadic volume until 2:20 and fell on steady and increasing volume. All of the rallies were contained by the zone of distribution above 913.25. The last two bar rally was followed by the sharpest and highest volume decline of the day.
Thursday opened with a weak rally and then a decline on higher volume than the opening two bars to 898.25. We slowly rallied back and upthrusted in a reversal bar the peak at 8:40 and then fell back. All rallies until 12:20 were characterized by pathetic volume. After the 12:20 upthrust which confirmed the absolute lack of demand, the sell off began. Supply was in control until 2:30 at which time some demand entered the market. I believe that large supply pressure was hidden in this last 30 min rally as the upward result is not proportional to the upward effort. The ease of movement is not present on the rally like the decline meaning that the line of least resistance is still down.
I hope i have shown how a market changes from being controlled by buyers to being controlled by sellers with the result being a possible change in trend. As I mentioned in an earlier post, this change in trend could be very significant.
I do not believe that supply was nearly as dominant today in the euro fx or gold but we are out of time for this post.
w
