Let' s begin with the daily point and figure. Note the shortening of the thrust that accompanies this rally. After the first decline from the 77 level the market rallies 3 additional points to 80 before reacting, then 2 additional points to 82 before reacting and finally 1 additional point to 83.This shows the increasing resistance to the move and at the red "0" we are on the hinge. If one looks for a moment at the 15 minute bar chart, the hinge is between the supporting trend line and the reverse trend line drawn through the last two tops.
Turning now to the daily, before this week volume was lighter on the rally than the preceding decline, with a surge on the 18th, followed by a reaction in which volume sharply declined. That was last Friday. This week we had three days with heavy volume and almost all the closes were in a narrow range. This would imply that supply is overcoming demand. Monday had a very large range and prices went to a new high for the move, however volume did not meet the standard of the 18th or 19th. There is less demand. On the 24th there was no follow through. On the 25th the market found support and rallied off its lows with good demand, heavy volume, on the rally. Thursday was a narrow range day with heavy volume. The volume is heavier than Monday and the range narrower, showing increased resistance to the move. The gap down opening on Friday shows that supply was overcoming demand Thursday. The true range on Friday was adequate although the actual traded range was the smallest in months. We moved down easily, with little resistance. This opens up the possibility that buying powerhas exhausted itself--no demand. When we finally get to the intraday 5 minute chart, we will be looking for evidence for or against that possibility.
Please now look at the hourly point and figure chart 1x1(it has blue, red and green lines) As usual if you drag it to the desktop, and then double click it, you will make a zoomable, even if fuzzy, image. Firstly, look how well the trend lines work on this chart. There are two possible green uptrend lines. The first has already been broken and we rallied up to test it and fell back an "0." The second possibility, the lighter green line, emphasizes the hinge we already discussed. If we break three points from here, the back bone of the advance is broken.
The other very nice thing about this chart is that it is countable. Above the upper blue line there are 19 x's and o's. Subtracting 19 from 87 gives us 68 and from 83 gives 64. Our downside target was between 64 and 68. There is a better count at the low, besides the lower blue line, which I just noticed. The 11 boxes across 72 give an upside count of 83. If we rally further then we will use the count above the blue line. The 11 boxes across 72 give an upside count of 83 which we have accomplished. We can now count 6 across 82 giving a target so far of 76 or 77.
Looking at the 5 minute 3x0.1 we have had our first series of lower highs and lower lows that was not almost immediately reversed.
I am sorry but I cannot make the intra day wave volumes legible. I broke the chart up into two halves hoping to make it more legible but it did not work. If it were possible I would have shown how each advance during the day was sold heavily. So I am going to sleep.
