At last everything worked as it should. Supply came in with a reversal(not shown) at a bit less than 50% retracement. The high price today on the $spx was approximately the 2002 low. The market however gets interesting on the daily chart. Yesterday I pointed out that demand was disappearing and today with slightly higher volume and a close at the bottom, supply came in. On the hourly notice that we put in our largest hourly decline since the upward trend began, more evidence of supply and that the ease of movement has gone over to the downside.Finally please look at the 5 minute bar chart. Note how each of the up waves, restrained by the reverse trendline, has less volume than the preceding wave. At last at 52 with a narrow range and low end close, slightly above the supporting trendline, demand was exhausted. The key here was to recognize the short covering rally and wait until the last bit of demand was exhausted and that happened at the wave labelled with the 52. The acute trend line gave way shortly and the direction with the least resistance was down the rest of the day.
Now we must watch where the support comes in and whether supply can re-establish itself or is it as exhausted as demand.
Personally, I believe the trend remains down and the lows will give way shortly. Writing this blog has taught me many things, but the most important is and I believe Mr. Wyckoff would agree, the importance of the trend. Every night having just to look at the charts and write about the long term tend has become a constant remainder.
