Unfortunately due to program problems I cannot draw in all the trend lines I would like. Let's begin with the daily Dow. The high volume of the last two days, the reversal bar and closing below the last three days close all provide some evidence of selling pressure entering the market. The range was relatively restrained so there was no ease of movement down. The market was still supported.Turning to the hourly, today was the largest range down since April 20, when this up move began. This warns us together with the high volume that the end of this rally might be approaching.
Turning to the point and figure of the spx, note that after the vertical rise of 5/4 the average entered a more jagged looking advance where the up waves had reactions that penetrated well into the preceding trading range. This inability to hold the advances shows that supply was entering the market. The rapid thrust to 928 and equally quick sell-off points to distribution. Buying created the flat move across 905.24.
Now let's see if the intraday confirms our inferences. Despite the large number of errors resulting in unusually wide bars, I believe you can see the very heavy selling until 10:35, wide bars. lower end closes, and heavy volume. After the weak rally to 11am, the decline resumes with less volume and smaller ranges. Three closes about the same end the decline and an even weaker rally begins, it ends in an upthrust at 12:40 and demand has disappeared by 12:55. The lack of demand triggers selling at 1pm but the narrow ranges and uneven low volume say the selling pressure has diminished. Three narrow bars with about equal closes around 1:45 end the down move and a sideways move begins. The decline to 2:40 has little pick-up in volume and narrowing of the thrust. Supply pressure continues to wane. The market without the selling to go down moves sideways until another short thrust into a spring at 3:30. This wide range bar has no follow through at the quick reversal on the next bar and then a 4 bar rally with each bar closing at the top with very good volume. The trend line is broken and demand has kicked in.
Finally I copied some charts of commodity indexes. With all the talk of deflation, I thought you might like to look at some charts to see if it is really true. I am thinking of making this a regular feature for the time being.
