The potential rally I wrote about over the weekend did not materialize today. Instead, it was obvious near the open of the US session that the market would cross the 1300 threshold that would cancel the rally.
It is always important to have a game plan, but it is always equally important to know when that game plan is no longer functional. This can anticpated in advance. We can then shift to a more useful plan, and in today’s case, that was playing to the short side through the morning session.
Sellers today took the market down lower, but could not trade it very far below last Tuesday’s low before buyers stepped in. Today’s low came down to resistance from June 21 & 22 – just before the last rally, which has the ability to provide support. You can see on the 180-minute chart that a potential spring situation is setting up. I will be watching early tomorrow to see if buyers can excercise some strength and push the market higher.
Key levels for tomorrow are today’s low at 1291.25 and the 1327 level highlighted in the last post.
yesterday afternoon small rally’s volume was pretty small compare to the morning’s bigg drop. I probably going to pass this spring.
Thanks for your comment. I appreciate it.
We often see rallies on light volume. I don’t put too much weight on that. The key decision points here was not the light volume rally. Instead, it was the inability of sellers to take the market down lower at previous resistance. We also see a much stronger rally from late June into early July compared to this reaction thus far. Market structure suggested a rally, which occurred. Market structure will always trump individual waves and their respected volumes.
All of this being said, be cautious of this Spring. So far, it is working, but it is not what I would call a vigorous spring.
Thank you Dr. Gary, I often put too much emphasis on volume and latest market action,