This morning, after last night's discussion, I looked up the last time the Dow fell below its low of 10+ years previously, and not surprisingly it was in 1932. That decline took about 3 1/2 years, so now we are moving about twice as quickly. In 1929 stock speculation had become the epicenter of the bubble, now it is the world wide credit bubble. It was one of Mr. Wyckoff's heroes, Jesse Livermore, who emphasized the importance of these pivotal points.So let us go to the details. I put up a 1x3 point and figure of the SPY. Mr Wyckoff was nothing if not a point and figure chartist. I wanted to show how well the trend lines are working and have worked. If the current row of O's continues straight down it will intersect the trend line at 57 or so.
The 1x1 point and figure continues to wend its bearish course.
The daily SPY had its fourth consecutive close on the low on decreased range and higher volume. Lets look at the intraday again to see if this indicates demand.
Fortunately for the bears it does not. After yesterday's decline, supply took a rest. Please observe the wave volumes. Although we moved down from the opening, it was without gusto. The lack of supply failed to trigger serious demand or even short covering. Notice the up and down character of the day's large rally from 692 to 709.25. At 710 (43) demand failed. This triggered supply and so we closed the day making new lows on heavy volume. One cannot even call this poor showing a failed rally followed by supply. Supply took a time out and then came back to play.
