MARKETS 4/23/09

There is a problem in these charts. Please begin with the daily. On 4/20 the market had a wide open break, perfect in every way, even predicted by this blogger, except no significant volume came in. 4/21 was a reversal day and volume increased. 4/22 another reversal day on still higher volume. 4/23 yet another. All of the closes for the last three days are in a narrow range and sometimes I think this pumping action of up-down is a type of ending action. Clearly supply was unable push the market below Monday's range. Unfortunately there is a rumor and it seems supported by the charts that the SPY is on the hard to borrow list for short selling. See the blog ZERO HEDGE. This is why there was no volume Monday and it explains the intra day movement we will discuss shortly.

First lets look at some point and figure charts. Let' s begin with the 1x1 of the 5 min spx. Note how the thrust shortened from the low at 838 to the low at 836. We rally to 839, revisit 836 and then rally 5 "x's". There is now more strength than weakness and the market rallies to 847.

The last column of that rise is a spike which is retraced in the next column almost in its entirety. There are two more spikes before the close. I believe that this unusual behavior is short covering . And that is odd inside a trading range.

Finally please turn to the 5 minute bar chart. Note the sharp move from c to d 4/22. Sure looks like a short covering panic. The final move to 85.42 on 4/23 looks similar but is even steeper and the move to 2:40 on 4/23 is a little sister to the other two moves. Balancing these sharp moves-- we had true supply into the close 0n 4/22. Fortunately for the bears as soon as the short cover is complete the market seems to give all the gains back....so far?

ADDENDUM:In spite of this trumped up buying, the market has not gone to new highs. This would imply that supply is greater than the trumped up demand.