Yesterday we pointed to the disappearance of demand and the beginning of supply near the close. The supply never really kicked in, and while we never developed much demand, the market rallied. Later we will discuss what Mr. Wyckoff would have said about today's action but first lets do the details.On the point and figure, while the market can do whatever it wants, we still have not done anything to point to a definitive change from a downtrend. So far this is nothing more nor less than the normal back-up one sees after after breaking through support.
On the daily this rally was clearly accomplished on lower volume, indicating not so much demand as lack of pressing supply. We are getting into an old area where supply should start to make itself felt.
Intra day we make a spring on the 4th bar of the day and then moved up with true ease of movement. There is no supply blocking the way. Please notice how in the reaction from 205 to 17 firstly how few shares came out, how far the reaction low is above the bottom at 299 and most interestingly how all the three closes of the reaction 205-17 are contained in the range of the last upward bar to 205. This pattern continues for most of the rest of the day. It shows how the pressure of the selling was not great enough to move the market down at all. It is this lack of selling which characterized this rally. The demand wave numbers are mediocre at best.
Mr. Wyckoff would say the composite man saw the opportunity to cheaply move the market back into the area of distribution above 740 where he could sell some more at a higher price. I am not sure I agree with this, but since the shoe might fit, time will tell, I would be unfair to the purpose of this blog if I did not state what I believe to be the great stock market observer's opinion
