Here is the updated 30 minute bar chart on which I commented an hour ago.The picture has changed completely. The market just put in a very wide range up bar on the highest volume seen since the low on February 2. This is a clear example of a demand shock. If so I don't think we'll see any prints below 825, and I think it more likely that the 828-30 area will be support now.
A demand shock like this one coming after a higher low means that the market is now headed for 900.
7 comments:
A Swiss bank tells cleint to buy due to Bad bank announcement on Monday. I think the market is fooled and will decline all the way down to the low of the day. Regards
a short covering rally isn't always demand
To 11:18 am
You might turn out to be right, but as far as I can tell your just guessing - any analytical support for your guess?
To 11:28 am
How do you know it is short covering?
At the end of yesterday they were 60,458 more shorts for the day (most of this was at the 828 to 832level). Today also started out with more shorts. (you and I were also short). When the market started up shorts start covering (like we did). Short covering is usually fast just like this until it finds supply which was at yesterdays upper vol.cluster and where the selling started 838.
OK, that's a reason. But the volume was very, very big. I generally find that fast, low volume rallies are the ones generated mostly by short covering. It is the high volume rallies that indicate new longs coming into the market.
Carl,
1st wanted to thank you for this blog.
had a question about the volume; is it possible that the supply shock was half supply shock and the last half was start of accumulation.
I would think it is a combination of both. there really is no right or wrong.Trading is only all about buyers-sellers,demand and supply. Keep it simple.The charts will speak to you if you let them. volume is the best indicator...
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