Compare the advance off the lows to the other charts below. All the other advances had the power to make it past at least a few of the congestion zones on the right. It is no wonder that this is the first market to get into trouble. See below.
Beginning in August this market became disorderly. It made both higher highs ans lower lows until the peak. About this time the ease of movement started to be greater to the down side than the up side and that has continued. Given the weakness of the last rally there is a good chance this market has turned.
I posted the American market for comparison purposes. However the last 5 congealed rows should not be interpreted bullishly. This sharp up down movement in a tight range after a long advance is the hallmark of distribution.
From August on this advance struggled mightily. It had a stair step like advance but it always fell deeply back into the preceding range and then had a sharp short covering rally. Behavior changed on the last decline. The DAX made a lower low for the first time since July and the short covering failed to make a new high. As such we have a potential down trend which will be confirmed by ease of movement down. With this kind of formation and distribution going on during the advance since August, the downward count can become tremendous.
For self instruction compare the chart of Brazil, our South American representative with the Netherlands. Brazil came no where near a new low in March for example. Study the amount of overlap and retracement etc; How many of the reactions are 50%?The largest reaction is the one off the high at 67500 for 7000 points. It followed Brazil discussing a 2% tax on hot money entering its blowing off stock market. Since then the market upthrusted its high by one x and fell back into its range. This like all the others might easily be topping action.
Australia was halted by long term resistance. It made a higher high then a lower low in its present area of congestion. It closed Friday in the middle of its trading range.
Since September, this chart looks distributive. The down move from 4850 t0 v4550 was stronger than the immediately preceding upmove. Since then Australia despite all the bullish song and dance about commodities has failed to make a new high with the S&P. You can see on the daily that the last rally was stopped at the zone of distribution.
From the Euro zone this chart is essentially the same as Australia. I would just add that since August, it has struggled higher with each rally falling back into the previous zone of congestion. The decline from 328 gave back every x and as such marks a change in behavior as this is the first time this kind on thing has happened since March.
I posted these because all markets with the exception of Japan and China have been moving together and against the dollar, often during the day on a tick by tick basis. Hopefully the charts of overseas markets make our own stock market clearer. They will move together.
Australia was halted by long term resistance. It made a higher high then a lower low in its present area of congestion. It closed Friday in the middle of its trading range.
Since September, this chart looks distributive. The down move from 4850 t0 v4550 was stronger than the immediately preceding upmove. Since then Australia despite all the bullish song and dance about commodities has failed to make a new high with the S&P. You can see on the daily that the last rally was stopped at the zone of distribution.
From the Euro zone this chart is essentially the same as Australia. I would just add that since August, it has struggled higher with each rally falling back into the previous zone of congestion. The decline from 328 gave back every x and as such marks a change in behavior as this is the first time this kind on thing has happened since March.
I posted these because all markets with the exception of Japan and China have been moving together and against the dollar, often during the day on a tick by tick basis. Hopefully the charts of overseas markets make our own stock market clearer. They will move together.Please look on your own at the Nikkei, the Swiss, which is a direct speculation against the dollar, the Russian market( they want to put a Tobin tax on to stem speculation and it is the strongest market in the world.)
