Waiting for Change

The first trading day of the week showed that weakness was prevalent. We did not breached the sell point on the short term trade and instead saw a constant erosion throughout the day--a sign of extreme heaviness. A real dose of reality set in the stock prices. There is no question that the manipulators were in pushing prices up Tuesday. The resulting rally pushed prices back above where we were before the Boston bombing incident. This took an incredible amount of money to manufacture this rally but nonetheless it occurred. It appears that the bonds were also being held during the day session maintaining above 147 1/4. The fact that we were at a resistance area that was penetrated by the Boston bombings and then reversed means that the 148 ¼ is still valid as a major resistance. I have seen over the past several months where the master computer is engaged to mount a dynamic one day rally such as Tuesday’s rally was. Usually the next day they are noticeably absent as we saw the overnight give back some of the power rally. The technicals for the short term are now showing legitimate resistance at 1570. The downside has been curtained between 1530 and 40 with no closes below 1540. Therefore we are in a box formation. It is very interesting that from Tuesday’s highs toWednesday’s S&P lows encompassed the entire range of the ceiling to the floor of the box. This means the 1570 ceiling and the 1540 floor were both touched both days respectively. This is noteworthy and even more so if we close outside of one of these numbers. For example a close below 1540 would finally break the bottom of the box as well as a key previous support area which would mean that the charts have finally turned downward.

The big picture is the critical overlay of the current environment. We have finally seen some selling come into this market even with Bernanke trying to hold prices. However we need to start seeing a prevalent consistency of high minus tick. For example, if we could have a day of at least 10 minus 1000 ticks, this would demonstrate that this market is in corrective mode. Many times the situation on Expiration Fridays causes the bonds to be more of a forgotten child. We will see if that is the case today as clearly Wednesday and Thursday had manipulators holding prices.