Happy New Year!!!
It was great New Year, was even more hilarious seeing all the cars pulling over on the side of the road to spew their festive drinking. 2010 was great! It was all low volume pop. We had fun with the fat finger day which helped the bullish run even more. And although that seemed like huge volume, what people didn’t understand about it, was it help extend the run to the upside by relieving some of the bearishness in the system.
The bearish notes have not gone away. Technically we are popping on low volume. There are great things happening with this action. It delays the bears and at the same time strengthening the levels of support that will act as a buffer to slow down the bears. This low volume will continue. The sideways movement will continue, and in longer term perspective we are distributing still. What? Really?
When we are talking about daily and weekly perspective, we are talking about very long time maturity of setting up. This is something traders don’t seem to understand. They don’t really put what they are seeing in proper perspective. They see distribution but don’t realize that distribution is working to accumulate in the longer time frame. Then they have really large unsupported expectations about the distribution. For the last few weeks there are these poser EW people highly biased for the 1130 to hit, completely ignoring the longer time frame trends to hit the previous support as shown above.
As you can see, this weekly is targeting its previous support lost back in July-Sept 2008. We are coming up on levels back in 2005 and 1990’s. The pop thus far has been on low volume. What exactly is going on with the market?
Well, if we sustain low volume, we will continue to follow the monthly momentum.
What does the monthly have to do with the low volume? Trend. Plain and simple. If monthly was bearish, a low volume will follow that trend and sell. Low volume does not mean pop. Low volume follows technical laws by following trend. Generally will default to a longer time frame trend.
As you can see from this monthly, we are currently working on reclaiming the support we lost back in Sept 08. The start of the leg down that brought us down to the 665 lows. Coming up here will also approach a level that was significant back in 06 that was overcame back in Sept 06. This level of support was a battle ground back in 2008, ultimately failing in Sept of that year. So do we expect a battle here as we come up to it as resistance?
Anyways have fun this new year.