Wednesday 9 June 2010
This is what can happen in a trading range: a promising rally, followed by a
promising decline, neither able to deliver. Ostensibly, today’s failure to hold
gains that turned into losses would be the prelude to the breaking of support
…but hold on.
Wednesday’s decline was a wider range bar than was Monday’s decline, and
volume was greater on this last drop, but…and this has typified this trading
range…just when it looks like the direction is clear, price reverses. Look at
the activity bar from Wednesday. The saving grace for the bulls is that the
drive down, while closing negatively on the low, did not make a new low close,
nor did price exceed Tuesday’s low. Why not?! This was the seller’s chance
to once again rout the buyers but did not. Of course, there could be more
downside on Thursday, making these observations moot.
From a factual perspective, what rallies that occurred have been weak, and
Wednesday was no exception. However, support has not been violated.
Looking at Monday’s lowest close since February, it was the smallest volume
of the past four days, and that suggests the selling pressure was not there
when it was opportune. The facts say support should be broken. The
character of the price volume make-up leaves room for doubt, but with time
running out.
The intra day activity provides more detail. Mention was made about the
overlapping bars at Tuesday’s lows being a battle between buyers and sellers
when sellers should have been in absolute control, [See S & P – Truth Time Is
Nearer, click on http://bit.ly/9WWGuQ, first paragraph after first chart]. That
led to Wednesday’s continuation rally that failed at 1077.75 before giving back
26 points to close on the lows.
Where did the low of that 26 point decline stop? Right at the upper end of
the overlapping bar battle, the last vestige of support. Support is still
tenuous and may give way in Thursday’s trade, so there is nothing for certain,
although the momentum is with the sellers.
If downside is limited on Thursday, the grasp on that momentum lessens,
and the potential for the rally that has not shown up lingers, maybe even
going above 1078. If price accelerates down, instead, look for 1020 to 1,000
in short order.
[Chicago Blackhawks win the Stanley Cup!!]
