Last week the daily Dow peaked on the high volume pumping action I commented on. Tuesday looked like a spring but in reality it was a rally that failed, confirming the exhaustion of demand at the top. Wednesday was a low volume high range decline which broke both trendlines. While expanding volume would have been nice, it is not absolutely necessary. The ease of down ward movement is much appreciated. Today the average rallied on very low volume, tested the purple trendline and closed in the middle. This was a surprisingly weak rally. The rally was stopped not just by the trendline but also by the zone of distribution last week.Turning to the hourly bar chart, around 88.50 you can clearly see the pumping action that put in the low. The rally to the red line is called a backup to the ice.(It is a long story.) The last bar with its close below the low of the prior bar is weak. The down trend is clearly framed by the two trendlines, so far. Support is around 87.5 and below 82.5 is a whole new ball game.
Unfortunately I cannot draw any lines on the 5 minute bar chart. After an opening rally, the SPY makes a new low and a spring at 88.5 from whence it rallies sharply, more quickly than it fell and makes a new high for the day giving us a sign of strength. This of course is tested back in the trading range and at 10:45 there is another spring. This begins the 10 point rally to 12:30. Declining volume accompanies this rally. Volume declines even more on the reaction to 1:25. The rally that follows also is weak and ends at 90.12 with a narrow range high volume bar where supply finally puts the struggling rally out of its misery. Over the next hour trace out the significant bars as we have discussed them so often.
All in all supply does not follow up its advantage all that well either. As a result I cannot predict tomorrow's opening. However unless something changes no matter where we open tomorrow the game is going to be where to get short.
I have included quite a few commodity charts. Please do counts on the pnf charts and you can see that we have accomplished many objectives. On the bar charts all can go either way and they will probably follow stocks.
