The daily Dow pretty much remained in the middle of April's price range. The day had a narrow range closing in the middle on light volume, but slightly more than yesterday. This swing to the middle can be seen on the two spx point and figure charts above. Our job here is to try to determine which if either side bulls or bears has the advantage.On the hourly support came in at the trend line and resistance at 86.5 an earlier high price. If we look at the 1X3 pnf the current hinge is clearly displayed as it is in this hourly chart. Again not much help in finding an advantage.
The 5 minute bar chart begins the day with yet another steep short covering rally which even has a 12 million share spike in the middle of a trading range. As shown by the 11a.m bar this rally exhausts demand. The market does not however give back all of its short covering gains as it did so often in the previous few days. Instead we are supported at the old support line around 85.5. Clearly the force of supply is not as great as after previous short covering rallies.
The two red parallel lines frame a trading range which is upthrusted to "O" in what is probably more short covering. Here the short covering volume was lacking implying such demand is waning and the supply into the close also has more power. The last 4 bars of the day are support coming in while in a spring position.
It seems to me that the weakening of supply is telling and at the very least tomorrow or overnight I would expect the last rally to complete the megaphone not drawn that includes the two rally peaks. We must see if we can develop any demand that is not short covering.
