Thursday 19 November 2009
We mentioned yesterday that buyers would not be able to stave off sellers
for forever, and selling entered the market right out of the gate on Thursday
as price gapped right through support lines. The 60 minute chart shows how
the high of the day was the open, [Day session].
The sell-off occurred on a wide range bar, showing ease of movement to the
downside. The close on that bar was not as weak as sellers would have liked,
especially on such strong volume, and that augured a potential rally of some
kind. As price then traded sideways for the next five hours, it became
apparent that supply selling had dried up, and that would prompt some short-
covering. The end of the day rally reflected just that, short-covering. It was
not demand buyers coming in. There is a qualitative difference.
The S&P is likely expanding the current trading range, and lower support would
be the 1082 area, and 1075 under that. Where price will go and/or hold cannot
be known in advance. All that can be done is to respond to the present tense
market activity, by going short this morning, and then see to where it leads.
The support channel line was in jeopardy the past few days, seen just above
today’s gap lower as price was trading through and under the channel line. The
lower opening is entirely under the support channel line, and that puts the daily
trend back into a trading range environment. The intra day 60 minute chart
now has a selling wave underway.
Friday is end of week, and the current weekly range is also small, not a
positive statement for a bullish scenario to continue. Just as the last few small
range days led to selling, a poor close on Friday can translate to sellers in the
weekly time frame. Last Friday’s close was 1091.50. A close at or under that
level will make it more difficult for the buyers to retain control.
Short, for now.
Stay tuned.
