THE WEEK AHEAD
Last week we stated that the bottom of the upper gap appeared to be suspect as price had traded there too many times, which demonstrated price acceptance rather than price rejection. Going into the first week of March, we have just the opposite situation; the bottom of that same trading range has seen price trade at or near the balance area low 5 times. See graphic above.
Any rally that occurs prior to, at least, looking below the balance area low (trading range), marked on the graphic, would have low odds of being sustainable. The real auction-generated information would be what occurs if the market looks below the balance area-price acceptance or rejection.
While Friday's break appeared to be on increased volume, the volume rate going into the close was approximately the same as Thursday's, which was low. A friend assures me that the 300,000 shares that printed on the bell was simply month-end activity and shouldn't be considered as increased volume on the break.
I have previously voiced the opinion, based upon my experience, that the original market low is unlikely to hold; however, that doesn't mean the short-term actions might not extend its longevity. Historically, my observations have been that markets need to find their own natural level and those actions that delay markets self-discovery may, in fact, result in larger problems later.
Last week we stated that the bottom of the upper gap appeared to be suspect as price had traded there too many times, which demonstrated price acceptance rather than price rejection. Going into the first week of March, we have just the opposite situation; the bottom of that same trading range has seen price trade at or near the balance area low 5 times. See graphic above.
Any rally that occurs prior to, at least, looking below the balance area low (trading range), marked on the graphic, would have low odds of being sustainable. The real auction-generated information would be what occurs if the market looks below the balance area-price acceptance or rejection.
While Friday's break appeared to be on increased volume, the volume rate going into the close was approximately the same as Thursday's, which was low. A friend assures me that the 300,000 shares that printed on the bell was simply month-end activity and shouldn't be considered as increased volume on the break.
I have previously voiced the opinion, based upon my experience, that the original market low is unlikely to hold; however, that doesn't mean the short-term actions might not extend its longevity. Historically, my observations have been that markets need to find their own natural level and those actions that delay markets self-discovery may, in fact, result in larger problems later.
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