Once again I will be brief. Today the Spy gapped down and closed near but somewhat off the lows on average volume. We did not get heavy supply and the confirmation of trend I hoped for. Further the market closed within its range of the past two weeks and in a spring position.All of this sounds pretty bullish, but there are two serious problems with the bullish scenario. First, gaps directly after an upthrust are usually pretty bearish. Second, today is the largest true range so far this month as can easily be seen by eyeballing Friday's high to today's low. As anyone who has been lucky enough to study with David Weis will remember a sharp increase in range can confirm the move. This puts the average volume in a new light. We fell easily with little effort meaning that the direction of least resistance is down. Remembering yesterday's post and the absence of demand I interpreted, today's ease of movement confirms those deductions. No Demand implies little resistance to downward pressure.
Briefly the market fell rapidly this morning on heavy volume. After hours of light selling and even lighter demand buying emerged at 2:55 and the market proceeded to recover 0.6 points. This relatively small demand was met with supply. Notice how many closes in the last hour were virtually equal meaning all the buying had little effect. That being said having surpassed the high of 11:45 we are in the position for a potential small uptrend and that in a spring position. In the absence of heavy supply we need continued light demand to maintain this down trend. Any rally to a lower high confirms the downtrend further.
