Saturday 21 November 2009
For the weekly chart ending Friday, the S & P market is showing signs of
a tired buying environment where efforts may have been spent, temporarily,
at a minimum. This is a fairly easy read of market activity. The ranges are
very small at new highs for the move. Small ranges tell us that buyers are
unable to extend their rally efforts any higher, and last week said that quite
clearly. Price made new highs, but again on a small range that was a failed
Rallying above the recent highs uncovered no new buying. That being the
case, price declined on Thursday, and was unable to recover throughout
much of Friday. Note the horizontal line drawn from October 2008. That
was an extremely large range bar down where massive selling came in and
drove price lower. That vertical bar marked the beginning of ease of
movement to the downside, and typically, the high of that kind of bar will act
as future resistance because it was the starting point of important selling,
and sellers will defend it. So far, that has been the case.
Note how the selling bars from 2008 were wide range bars, and contrast
them with the rally bars of 2009. The rally bars are much smaller, and the
move up has been more labored in recovering back to the October 2008
The fifth bar from the end was the last time there was a lower weekly close,
and it led to a decent decline. The difference this time is the failed attempt
to go higher above that recent high. As we have been saying for weeks
now, volume has been greater on declines than on rallies. This can and will
persist only for so long before the reality of supply and demand efforts kicks
All this evident buyer weakness notwithstanding, sellers are even weaker!
One "fundamental" reason given for the decline in volume is that the
lemmings on Wall Street do not want to do any selling but just keep what
profits they have locked in so as not to jeopardize their year-end bounuses.
So much for consideration given to client interests. "Me-first" is still
prevalent on Wall Street.
We are biased to not being long this market, for reasons amplified in the
past several months, and it appears that the market is bending. We
continue to wait for a break.
We are partially short, [not fully committed in position], from Thursday, with
stops of course, and we continue to look for weakness to sell, especially
There is a distinct possibility all of this much ado about nothing in the
stock market could carry through to the end of the year, especially with a
few major holidays keeping many participants away. Cannot fight the tape,
even a lackluster one.