Let's begin with one of the two daily charts. On the SPY for example, as noted previously, supply overcame demand beneath "C" and we fell back into the trading range with ease. Similarly on the 30th we also fell easily. We fell however to support at the trend line and also support at the level of the 2002 and 2003 lows(the blue line). This placed the market in a spring position vis a vis the high volume low of 3/25. Today we rallied with a gap opening off of that spring and tested the support line of the previous uptrend. The spring has failed so far with higher volume and a close at the bottom. We now need a large range high volume decline to seal the bear case deal.
Turning to the 60 minute pnf notice how well the green and red trend lines define the apex at the 80 level. This rally has also broadened the range of distribution to 11 boxes across the 80 line giving a potential low of 69. Any further additions to the count would push us through the old low at 67.
If we now look at the 60 min bar chart, I have already pointed out the potential spring yesterday. Please notice the small range bars that characterize the decline yesterday after the opening as well as the rally today. Today we were unable to rally into the zone of selling above 810 which is very bearish. Most important however is that if we look at the true range yesterday of the opening bar and the range on today's closing bar, they are the largest range down bars since the rally began. Unlike almost the entire rally, selling pressure can now push the market down. The ease of movement as we noted in the daily chart discussion yesterday and today is down. The factor which says not yet is today's rally went further than 50%.
Moving on to the 5 min point and figure, lets first look how well the lines work. Observe the area around yesterday's low. The market has entered a trading range between 78.5 and 79.0. We break to 78.1 in a possible spring and rally 5 x's only to fall back and make new lows twice each time by 0.1 points. Drawing in the fine lines on both sides of this small break below the trading range, hopefully you can clearly see that at the last x at 78.1 we are on the hinge for an up move. Moving up 6 x's, the largest upward move or line in the day confirms the bottom is in. We next rally to the resistance at 78.7 and then test the level at which we broke the small steeper red trend line with the last 0 at 78.3. From there we move up sharply breaking through all resistances. We now test the breakout by declining to the level of the breakout at 79.1. We move to a somewhat up sloping trading range bounded by 79.9 and 80. Note how the x's and 0's seem to flatten out here. This shows the pressure of heavy supply, or selling into the rally. The trading range is resolved with the successful spring at 79.6, which also enables us to draw our green trend line. The rally from here is sharp and furious. I mistakenly did not erase the entire typo on the chart and if you look at the 5 min bar chart you can see how much more above 80.5 and less than 80.9 (the scales are different but the relationship between the bars is the same) should have been erased. The last part of the sharp rally is almost immediately reversed and after a test of the highs which fails at 80.8 we then sell off sharply, ending about where we opened.
On your own find evidence on the 5 min chart for everything we discussed in the point and figure.
