The Dow went below the last two days range and closed well into that range very near the high of the day on slightly increased volume. This is all bullish behavior and we need either upside volume or ease of movement to confirm it because volume is nowhere near the standard of last week. This dipping below the recent trading range and closing inside of it near the high of the day was seen in many of the agricultural commodities today as well. It shows that nothing was for sale beneath the small trading range.

The hourly shows a clearly defined spring at 89.85 and the heavy volume it triggered. Selling came in on the close and a test will be necessary. I believe it will be successful and it might even happen in the overnight market.

Finally in this brief note, I want to look at the action in the spring area which is below 90.28 specifically. First note the shortening of the thrust as shown by the short orange lines. Point "o" is the last point before the final decline. As such it is the last point where supply overpowers demand on a rally before a decline. 1 is a reversal bar which makes us watch carefully, especially as the selling pressure has been so light and we are in a spring position.

The bar at 1:05 is a decline that failed to generate any selling and the next bar is absorption at the bottom of the trading range of the 90 orange line. Absorption relatively complete we move on two high end close bars to 2. That 2 is higher than "o" shows that the buying pressure is now greater than the selling pressure. This is very important especially as it is easy to follow in real time. The disappearance of supply to 3 confirms that selling has evaporated. The wide range up bar, 4, confirms the bullishness of the situation.

Many times is this blog we have discussed the disappearance of supply or demand and the ramifications of that fact. The lack of supply from 2-3 is enough to end the downward chapter that began last week and signal the beginning of a new upward move.