Rally Dying?

Or is it just a pause?

As we await another winter nor’easter here in southern New England we are trying to stay warm and figure out what the likely next move of the market will be and how much snow we will get.  The weather seems easier.  It’s been very cold here lately.  I awoke this morning to one degree above zero (that’s -17.22 Celsius).  It’s what we call pretty nippy. The ground is covered with about a foot of snow from last week and we are expecting another foot of it tomorrow.  That’s the easy part.

The market has been up for seven days in a row.  That’s a pretty good run by market standards and shows the strength of the rally.

The was obvious narrowing of range in today’s market with pretty good volume.  It suggests some supply is hitting the market.  We see a little today selling on the 27,000 tick chart (on the down wave marked A–larger than any recent down wave, though not terribly substantial), but then the correction simply went sideways.  So far, the supply has had little effect.

The key for tomorrow will be today’s high (1823.25).  I’ll be watching this level closely tomorrow along with the snow.  An intraday upthrust or a lower high should bring out greater supply.  This will be best seen on the Weis Wave.  If it does, watch for the market to make a run down to the 1805 to 1800 level, or lower.  I see this as having the higher odds.

The market could also try to rally higher after pushing up and through yesterday’s high, or spend more time going sideways.  All three of the scenarios outlined here are expected to be influenced by the supply seen to the left of the chart that occurred during December and January (red arrow).