We have been talking about the supply in the market for the past several weeks. There definately is demand, too. It is why the market has not fallen hard out of bed thus far. Nevertheless, the struggle has been favoring the sellers over the past month. Read the earlier posts for the evidence.
Last week we saw the market hold around the 1310 lows. Some buying came in at that level and the market rallied up. Thursday was a no demand day, and I had thought Friday might see seelers come in in force. Instead, buyers drove the market up into the 1345 resistance. Look at the sudden increase in volume — and on a Friday! A minor buying climax.
Friday set the stage for today’s negative action. No one could predict such a heavy drop; but everyone reading the market as it unfolded was aware of the possibility of a fall. Sellers stepped in an drove the market down. A break of the reverse trend line around the 1300 level will encourage sellers to push prices to test the last significant suport at 1290. A failure here will leave the 1243 area vulnerable for a test.
Keep in mind that larger term, we remain in an uptrend. At this moment, I still look forward to higher prices before the end of the year. Near term, however, the market has seen sellers enter. I have been writting about this since early May. There are many ways that the market can unfold over the next several weeks. Let’s just watch and see how this current downwave develops.
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