I believe I said yesterday we should see some action soon and today we did. Selling pressure began to dominate buying power as I commented on in the intraday discussion last night and that trend continued today.Enough of the self kudos, lets begin with the daily chart. Today the widest down bar since the rally began closed below the last 6 days closes on moderate volume. That the volume was so moderate tells us that we fell on lack of demand and that huge lines were not being pressed on the market. The lack of demand has carried over from the latter part of the upmove. Lack of demand can move the market quite a bit just like lack of supply.
If you look at the hourly bar chart, please notice that we closed in a possible spring position. Every bar since the last two hours Friday has closed on or about its low.(The long tails up to 85 are misprints.) This weakness makes a spring unlikely.
Turn to the hourly point and figure. Because of the misprints on the spy I am using the spx. 3 "0's" down is the largest down move since the end of March and as such a sign of weakness. The count of 4 boxes or 40 points across the 860 line calls for a minimum decline to 820-830 and as pointed out yesterday, this count can become very substantial very quickly.
Finally, let's turn to the 5 minute bar chart. A glance tells us there was no rally power all day. If we eliminate misprints, no rally was more than 0.5 points. I have labelled three bars. All three were relatively higher volume than the bars preceding them. Bar 3 contained almost all the closes of almost all the bars which came after it for more than 1 hour. The same can be said of bar 1 and bar 2. That these bars could contain the rallies that followed them is strong evidence of a very weak market.
