The early Monday morning saw the S&P without a friend. However the erosion was contained and a rescue push was orchestrated to offset price deterioration. The market had a very heavy look to it but as of yet has not fallen with the heaviness that it portrays. The bonds have been able to probe above132 even though they have had to weather some storm sellers. The upside has had a ceiling that would be penetrated if we could close above 132 1/2. I was impressed with every bear raid was met with some buying presence.
We approached the 1684 price area Tuesday, but did not probe into an area that should be a magnet for prices. Therefore this rally should provide an indication of the true magnitude of the strength of the manipulators. The fact that we journeyed above 1700 and then saw the true weight of the market overtake the bulls and provide more than a 5 point pullback demonstrates that no true buying is present. The bonds were able to move through 132 1/2 convincingly. This was the most persistent rally that we have seen in the last several weeks. The extent of this rally is yet to be determined but now it has become more than a dead cat bounce.
On Wednesday, the S&P actually had a pendulum swing, although the pendulum was unable to make a higher high it was able to make a lower low. There also was a manipulation period that pushed prices 10 points upward. The main focus for your diary is that all rallies by the S&P failed. We probed the 1684 price area twice, so there are sellers on every rally. This is a sign of a heavy tape. The bonds had some buying friends. They were able to sustain the rallies and build upon them which led to higher highs. We actually have rallied to points not seen in many trading days. This market is showing signs of stability and strength. Is this the Federal Reserves’ last hoorah to save face?
I will keep mentioning this to keep it at the forefront of your considerations. We must close below 1684 to start a down leg. Each day we probe into support areas but the close is important and imperative to set up a technical breakdown. We are into the tightening range that is basically less than 15 points and this is even more narrow than a typical box formation is. Tightness begets radical moves.
The bonds went exactly to the highs of earlier in the week. It is also noteworthy that the volume on the move to today’s 133 ’23 did not exhibit energy. This means that the true buyers are not in the bonds and we maybe printing out a top for the time being. The S&P lows at 1680.00 is very suspicious. A true market would not stop an a round number for an all day low unless a powerful computer is set up to stave off other bear raids. There is no technical reason nor tick reason that 1680 marked a low Friday.