"There is no change to the themes we have been espousing. It is rare when a lasting low is established in an electronic session. Last Sunday evening and Monday morning we traded below the last electronic low that had been the prior subject of our discussion only to have that low replaced with another electronic low. Our position regarding the new electronic low has not changed.
Second, market lows established as result of intervention or governmental actions usually only delay the end to the decline. This is not to say that the actions previously taken are wrong, in fact, they very often lead to a more orderly decline. Lows that are lasting, very often, occur on their own and contrary to the beliefs of many, are established on low volume.
The graphic shows the gap between 1289.50 and 1295.50 with two other lows within 1 handles of the gap high. Very similar lows are often a sign of short-term mechanical trading rather than new money buying; it takes new money buying to increase the odds of permanence.
Thursday's auction falls into the description outlined above as being stretched out with low odds of upward continuation. Your two short-term reference to begin the week are Wednesday's high and the lower gap."
Dalton
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