Unfortunately I cannot make annotations on charts tonight because of computer problems. Looking at the thirty minute chart roughly, please notice the action in the middle of the day Friday. There are three bars almost vertically down with high volume. This could easily be the beginning of a selling climax. It does not appear that the market has penetrated what would be a lower line of a downtrend channel, if I could draw it.
Since peaking on 9/19, the preponderance of closes have been near the low of the daily range, with volume gradually increasing and certainly greater than the volume on the advance preceding the high. We have clearly penetrated any trend lines I could draw. The decline since the high is the largest decline since the July low. It would be nice to see the decline from the high exceed in extent the rally in October which would further confirm a change in trend. And even nicer if the market could make a lower low by penetrating 6633.98. All of this becomes important because the volume Friday is getting to the level which may be climactic. It nears the level which ended September's run up and is the largest since that time. So we must be on our guard and stick to a plan.On the other hand the day of reckoning might very well not be tomorrow, as I pointed out in my last post, the first day of the month has been very bear friendly the last two months.
I just want to point out a few things on the 5 minute chart but if I get started perhaps I will point out more than I plan. First notice the tremendous effort to support the market in the third bar, this despite the fact there was virtually no short covering the day before. The close is off the high showing supply and the effort is quickly undone. That the market goes on after such an effort to support to make a token new low for the morning 3 bars later foretold more weakness to come. Another effort to support at 10:00 and the market declines to yet another low for the morning. On this reaction all the closes except for maybe one were off the lows, showing it was being supported on the way down. On the next rally ending at 11:00 all the closes were in the top half of their range but despite this effort the market could not rally into the top half of its 1 1/2 hour trading range. Remember Mr. Wyckoff said that frequently the last rally or reaction inside a trading range will not retrace more than 50% before leaving the range. The last effort at support ending at 11:30 has no result at all. Demand is exhausted and supply sets in. Compare the sharp down bars to the weak rallies. Compare the volumes and ranges. Notice how the closes on the rallies until 1:30 are all contained within one of the immediately preceding down bars. In the trading range until the end of the day the rallies meet good supply. There is a possible spring at 3:05 but the subsequent rally has no ease of movement.
In line with this kind of top the count is beginning to build as the market declines. Currently there are a minimum seven boxes across the 108 line giving a target of 101 and by going further across the 108 line the count could extend to 14 giving a target of 94.
I just want to point out a few things on the 5 minute chart but if I get started perhaps I will point out more than I plan. First notice the tremendous effort to support the market in the third bar, this despite the fact there was virtually no short covering the day before. The close is off the high showing supply and the effort is quickly undone. That the market goes on after such an effort to support to make a token new low for the morning 3 bars later foretold more weakness to come. Another effort to support at 10:00 and the market declines to yet another low for the morning. On this reaction all the closes except for maybe one were off the lows, showing it was being supported on the way down. On the next rally ending at 11:00 all the closes were in the top half of their range but despite this effort the market could not rally into the top half of its 1 1/2 hour trading range. Remember Mr. Wyckoff said that frequently the last rally or reaction inside a trading range will not retrace more than 50% before leaving the range. The last effort at support ending at 11:30 has no result at all. Demand is exhausted and supply sets in. Compare the sharp down bars to the weak rallies. Compare the volumes and ranges. Notice how the closes on the rallies until 1:30 are all contained within one of the immediately preceding down bars. In the trading range until the end of the day the rallies meet good supply. There is a possible spring at 3:05 but the subsequent rally has no ease of movement.
In line with this kind of top the count is beginning to build as the market declines. Currently there are a minimum seven boxes across the 108 line giving a target of 101 and by going further across the 108 line the count could extend to 14 giving a target of 94.
