[Gringo]

Db as always does such a nice analysis that it's difficult to come up with something novel. I am attempting here to show SPX montly to indicate longer term trends.

790 or below means probability of going lower increase.
Above 790 (staying in box) implies could go to 1150 or upto 1500.

Generally, the volume changes indicate higher probability for a move downwards in my humble humble opinion.

This may help traders who use daily charts to align their stars and be aware of danger points.

[DbPhoenix]

Updates on the weekly charts (that is, the weekly update of the daily charts). Note that while all the demand lines were broken, none were broken decisively. In fact, one could characterize the action in the Dow and SPX as tests.

[atto]

I'm sure we'd all agree the parabolic price action on the close was interesting.

And here we find price back up to the top. $SPX, $NDX, $COMPQ, and $NYA all have similar price patterns. Volume has been declining since the range was established towards the beginning of the month. Springboard?

As a note, here's some recent divergences between up and down volume, and price.

[DbPhoenix]

As you know, I follow "up and down volume" as well (volume of advancers vs volume of decliners). However, I also separate them in order to determine if and when "something is up" (so to speak) in a sideways movement, particularly if it's a lengthy one. This splits the voume in a meaningful way which also doesn't involve any work.

I'll use the Naz only, just to provide an example.

Note here that as price drifts up past 1720 toward 1760, the volume of advancers trails off. When it tries to make a new high on the 7th, buyers withdraw and the volume of decliners is dramatically higher. However, selling pressure is immediately withdrawn. There's no follow-through. Only later is price allowed to drift downward, gently. Volume of advancers declines and volume of decliners increases, but both changes are gradual. There's no "panic" here. After price hits support on the 13th, buyers come back again, heavy, but as price works its way toward resistance, volume of advancers again declines, at which point the volume of decliners increases. And so on.

This is classic. Price is pushed towards one end and whoever is pushing backs off in order to keep price within the range. There's no follow-through on either end. Detecting this using the ordinary measure of daily trading activity charted at the top (in green) is difficult because trading activity in general is heavy throughout in all the major averages, and coloring the bars often leads to exactly the wrong conclusion (and also interrupts "the wave" or the flow). Getting past the usual "volume bar", however, enables one to see who's doing what when.

The only question now is whether this is re-accumulation or distribution.

[innovation]

Originally Posted by DbPhoenix »

...
This is classic. Price is pushed towards one end and whoever is pushing backs off in order to keep price within the range. There's no follow-through on either end. Detecting this using the ordinary measure of daily trading activity charted at the top (in green) is difficult because trading activity in general is heavy throughout in all the major averages, and coloring the bars often leads to exactly the wrong conclusion (and also interrupts "the wave" or the flow). Getting past the usual "volume bar", however, enables one to see who's doing what when.

The only question now is whether this is re-accumulation or distribution.

What value is this if it doesn't give you an idea of likely outcome? What insights does it give that are useful in preparing to trade the culmination of the range?

I am asking as I am obviously missing the point not trying to be facetious

[DbPhoenix]

Originally Posted by innovation »

What value is this if it doesn't give you an idea of likely outcome? What insights does it give that are useful in preparing to trade the culmination of the range?

I am asking as I am obviously missing the point not trying to be facetious

The value lies in understanding that there is a purpose behind the movements within the range and not just an aimless drift. Therefore, one can expect the movement out of the range to be purposeful, and not just the result of bored traders looking for something to do. Atto suggested, above, that this might constitute a springboard, and anyone familiar with Wyckoff would be thinking the same thing. However, what seems obvious does not always turn out that way, and the Wyckoff trader would also be prepared -- as would Wyckoff -- for a sudden drop out of the consolidation, which would most certainly freak the longs and likely make for a nice short trade.

[wjrusnak]

A case for DOW 9000. This analysis is very narrow, as I'm focusing only on the DOW, but similar setups are emerging in the other indexes as well.



A couple things that I notice:

On June 1st, the DOW officially broke the bear channel set in place for the past couple of months, which one can deduce as a sign of strength and with that I placed a new demand line. In addition to that, it broke the midpoint of the congestion of the October lows. The next swing is set at 9000. The peculiar thing about this last push up is the seemingly weak break of the springboard and the decreasing volume of this entire move. Even so, it held the top of the springboard, which again is a sign of strength. With the weak volume (lacking buyers and sellers) it may be difficult to get past 9000.

The latest play would have been a long at 8600 (in some stock or the future) and looking to take some off at 9000. This is what lead me to the observation of that price point. In any case, I feel that we should see some excitement near that range, especially if it turns out to be a "top". And of course if that is the situation...we may expect an overshot of buying panic, which will "screw up" these lovely levels entirely.

Input and discussion is welcomed.

-- Bill

[DbPhoenix]

A suggestion. The trading ranges need not encompass every single bar. The purpose of locating the ranges is to find those zones where the bulk of the trades have taken place. This may seem like a duh, but it's easy sometimes to overlook. Therefore, when you have, for example, a shakeout, as here, you needn't feel compelled to include it. It's an anomaly of sorts, and since no other trades took place there while the range was forming, it can be ignored, at least in terms of the box.

Doing so raises your midpoint to a level that is on a par with yesterday's close. This in itself is not particularly meaningful since whether we have moved past the midpoint or only reached it is only one component to be considered. Other components, as you mention, include the behavior of the other major market averages. There is also the behavior of the trannies, the volume of advancers (which has been, for the most part, crap), the behavior of the sectors and so on.

On other other hand, you must also in this particular case consider the reshuffling in the Dow. Replacing AIG and GM with CSCO and TRV will likely provide at least a temporary boost to the Dow if for no other reason than that the replacements have been doing so much better than what they're replacing. Given how close we are to 9000, that alone may be enough to put us there, and one should be wary of attaching any particular significance to a bump up to that level.