I want to cover a lot in tonight's blog. On our 3x point and figure we have retraced the normal 50% according to Mr. Wyckoff and have inflicted maximum pain and losses to anyone who shorted indexes or bought puts for the break of the November lows. The trend remains down but the shorts as is typical are suffering enormously. On the 1x1 point and figure we are coming into resistance/old support and we will have to examine our other charts to see if we will have the strength to power through.

Looking at the daily chart of the SPY, we have moved up through the resistance of the November low and are nuzzled against the major trend line and the old 2002 low. Will we have the strength to power through? Volume has diminished for the entire rally. Today we took out yesterday's low and then its high closing above yesterday's range on the same volume. On the surface this would be bullish, but the failure of volume to expand makes me suspicious. This could also be shortening of the thrust. We will need active buying to get through the old resistance and trend line and so far it is not here.

Please now look at the hourly chart, of the 24 hour futures. The rally so far has been nicely contained within the red and blue lines. Yesterday we failed to rally close to the blue supply line for the first time since the rally began. We topped on shortening of the thrust at 771.25 and then had the largest decline since the rally began. We now have some evidence that supply has entered the market and is pressuring it. Moving sideways, we create a trading range overnight and then have a spring this morning. The advance is choppy until the last two hours today when we lift off vertically. So far we have failed again to reach the blue line and must wonder about shortening of the thrust( the declining amount that the blue resistance lines are penetrated.) This sharp move coming at the end of a large rise in the averages makes me wonder if we are seeing what Mr. Wyckoff would call hypodermics. Regardless this steep advance at the top of a large rise looks climactic or the beginning of a buying climax. In addition prices might be beginning to roll over in Wyckoff's terms. The alternative is that we are absorbing through old support and resistance. Time will tell.

I am running short of time. On the 5 minute intra day please note that yesterday's supply did not carry through at all. Very few supply waves have volumes in the 3 digits. Demand is not particularly notable until the blow off in the last hour or so. That rally of 12 points required 370000 contracts, heavy selling into the advancing prices.

Finally please observe the euro charts and perhaps we will discuss them tomorrow.