Lets begin with the point and figure, which is 1x1. After a back up to support now resistance at 80, another below normal extent rally, we proceeded down to 75. The lack of buying power is evident in the weakness of the rally and the downward trend on the the point and figure remains intact.Moving to the daily SPY, we engulfed Friday's price action and closed on the low with high moderate volume. Prices from the point of view of the daily moved lower easily and with no resistance. Whereas Friday I showed the large resistance to an upward move, today there was no resistance to the downward move.
The intra day confirms the lack of resistance to the down move. From the opening until 1PM we moved steadily lower and could not have rallied more than 0.4 points. A rally of 0.9 points begins at 1PM without any consistent increase in range or volume. Around the close some support came into the market and prevented a new low price for this bear market.
For a long time now we have seen buying for the purpose of supporting the market, or buying in spurts of short covering. Until that changes, until there is evidence of real demand, the line of least resistance will remain lower and there can be no change in trend. There is no real demand to stop the force of supply.
