In honor of the end of the month, I posted a bunch of charts. The monthly chart is devastatingly bad, with no sign of a bottom whatsoever. After a 56 point decline from 130 to@74 the market retraced 21 points, much less than the normal 50%. The most difficult thing about this chart is actually to believe it is as bad as it is. Next support is around 45.
The weekly chart offers little hope as well. Remembering the week before last had a holiday, we are approaching the lows, and we may have closed below them because 73.74 might be a misprint, on increasing volume. Last weeks volume was the highest this year. Not as high as the volume around the November lows, but we will remember that Mr. Wyckoff cautioned that volume tended to fall in a bear market.
The 3x1 point and figure luckily begins with the top in October 2007 and due to its editing out a lot of noise shows the unrelenting downtrend for what it is, a series of lows that give way and a series of highs that never exceed the previous ones. I do not know for sure how to make a Wyckoff count but I will guess and perhaps look it up later. We have 17 points across the 82 line suggesting a move of 51 points(17x3), which gives us a count of 94-51=43 to 82-51=31. This coincides with the next support. A move of 75-80% down from the October 2007 top will create enormous social pressure.
The 3x1 point and figure luckily begins with the top in October 2007 and due to its editing out a lot of noise shows the unrelenting downtrend for what it is, a series of lows that give way and a series of highs that never exceed the previous ones. I do not know for sure how to make a Wyckoff count but I will guess and perhaps look it up later. We have 17 points across the 82 line suggesting a move of 51 points(17x3), which gives us a count of 94-51=43 to 82-51=31. This coincides with the next support. A move of 75-80% down from the October 2007 top will create enormous social pressure.
The daily offers some slight hope, we have a narrow spread and high volume meaning that very heavy support came into the market. Unfortunately, the close on the low would seem to imply that despite the bulls valiant attempt, they did not carry the day.
So let us look at the intraday bar chart. The first three bars, while sufficient to trigger a rally are not stopping action. Volume spikes at 745.75 and will not get much beyond this the rest of the day. In fact the remainder of the day looks like distribution. After this first preliminary supply, volume does not follow prices down and supply dries up where noted. This triggers a short covering rally which has a large range and a high close. From this close we make no further progress on a close basis, with the exception of the upthrust which catches stops, the rest of the day. All of this upward effort will have only one result, exhausting demand. Please notice all the times that demand failed in this trading range and yet the support came back. Perhaps it was not their own money on the line. By keeping prices up, the support helped the bears. Finally we break on high volume to @734, where some support comes in and there is a tight rally on high but slightly lower volume where the bulls are stuffed with even more shares followed by a sharp break on the close.
I also included a 5 minute point and figure chart with volume for your perusal. It shows what we just discussed but in a different format.
