We will go through the daily chart and the point and figure rapidly in order to concentrate on the intraday, which we have not done in a while. The daily Dow again made a new high on low volume, as if to say if you didn't see it the first time, I am doing it again. Today however the volume contracted and the close was near the low and lower than yesterday, making it a reversal day. The inability to generate demand with a new high is now confirmed. Supply overwhelmed whatever demand there was.The point and figure chart is definitely on the hinge at the re "O". The count across the 870 line is 10 boxes for a target of 880 to 870. Of course that can increase but it is a nice 50% of the gain of from 670.
Turning to the intraday, the steep rally to 1 on very heavy volume looks like the beginning of stopping action and the subsequent bar , closing below the bar labelled 1 and the two previous closes on high volume confirms it. There is no follow through and it takes at least three bars to recover from the down bar's damage. When the market breaks into new high ground at 2 we are immediately hit with supply as evidenced by the mid bar closes and heavy volume. The market falls back about 50% to 10:20 and finds support with heavy volume and a high end close. There is a spring at 3 (10:45) confirmed by the strong next bar. At 10:55 the range narrows, volume increases and the mid range close all show supply is still present at the previous high. The red bar at 11:05 closes near the top after taking out the two preceding bars lows. This small sign of strength, while not receding in price even 50% of the range is enough to propel buyers into pushing prices to a new high. Unfortunately not many buyers rushed in, so volume did not expand. There is a nice reversal bar at 4 and on the subsequent bar we fall clearly back into the trading range. 11:25 has a small range at a level where the market was previously supported and at 11:30 we rallied to the green line and failed miserably on increasing volume and a low end close. Until 11:45 we hug the lows of the little green and red trading range, telling us we will go through the bottom. At 6 we do this decisively, supply overwhelming demand. From here until 6 you can trace out on your own, bar by bar. At 6(which is a buying climax) we begin 4 red bars each with a lower high, low and close than the previous one. This is the only string of so many down bars in a row and at 7 we have the expected selling climax. This is confirmed by the strong move with volume at 1:30, also penetrating the trend line. Until 2:10 the increase in volume on the rally is inconsistent and at 9 a buying climax. The rally at 10 shows demand is exhausted and 11 is another selling climax.
All of the closes inside the square at 12 are about the same and volume is high. Supply is overwhelming demand and I expect lower prices tomorrow.
