As is usual the point and figure tells the story. Notice that since June there are long flattened periods of distribution where the market has apparently encountered resistance and that little preparation precedes advances. Note the fall to 102.06 in the highest trading range. In breaking to this slight new low, we have a sign of weakness. The current break is the largest since this rally began in July and a sign that the trend has changed. In it we have decisively broken previous lower lows unlike the other declines since July.
ERROR
Please remember that the dollar is now the carry trade currency and any liquidation of speculative positions around the world will result in dollar buying to pay off debt. Now notice the pick-up in volume in the month of August. The volume surges accompany rallies and the volume falls off on reactions. The this heavy buying and lack of selling leads to upward ease of movement as for example the rallies to August 10 and 17. The higher high today with heavy volume and a wide range is suggestive of higher prices.
Bonds which in general move the opposite of stocks look to be on the verge of breaking out. More evidence of a flight to safety from risky assets like stocks. So much for inflation threats.
Today was the high volume wide range down day I have been looking for. As I have pointed out on many occasions there appeared only to be one buyer and today he lost control of the market.Nobody was more shocked than him, see below.
Today was a Fed permanent open market operation day, the quantitative easing day in which the Fed prints the money which finds its way into stocks and commodities and other assets. Expecting the usual end of the day buying the market shot up from the opening. At 9:50 we have the first high volume mid close bar indicating supply and at 10:00 the second. This truly is supply overcoming demand. After stumbling higher, the market falls, penetrating my little blue line with ease of movement, making a lower low(beneath the blue line being the old low.) The rally up is on decidedly less volume and the high of this little rally is an upthrust in a reversal bar. This makes a lower high and suggests a downtrend is about to begin. The move down has ease of movement and high volume, the break for which we have been waiting. Support comes in at 1 and 2 both of which correspond to the psychological point of about 1000 on the futures. From 2 the market rallies weakly on sporadic volume to 3. Find the lower low and lower high that indicate further break on your own. Support comes in at 100, how quaint and how manufactured. The volume to 5 is the QE money we have seen so many times and this just printed demand is filled with little net price change, supply again overcoming demand. As of the close the sellers are in control.
Today was a Fed permanent open market operation day, the quantitative easing day in which the Fed prints the money which finds its way into stocks and commodities and other assets. Expecting the usual end of the day buying the market shot up from the opening. At 9:50 we have the first high volume mid close bar indicating supply and at 10:00 the second. This truly is supply overcoming demand. After stumbling higher, the market falls, penetrating my little blue line with ease of movement, making a lower low(beneath the blue line being the old low.) The rally up is on decidedly less volume and the high of this little rally is an upthrust in a reversal bar. This makes a lower high and suggests a downtrend is about to begin. The move down has ease of movement and high volume, the break for which we have been waiting. Support comes in at 1 and 2 both of which correspond to the psychological point of about 1000 on the futures. From 2 the market rallies weakly on sporadic volume to 3. Find the lower low and lower high that indicate further break on your own. Support comes in at 100, how quaint and how manufactured. The volume to 5 is the QE money we have seen so many times and this just printed demand is filled with little net price change, supply again overcoming demand. As of the close the sellers are in control. 
