What we are doing right now is what I call "Ping/Pong".
If we are to move higher and take out 2106 COMP, we need to overcome the massive down volume that drove us down the first 3-days off that recent high.
How do we do that? We do it through volume tests of support and resistance.
This drop ideally should test a support level on reduced volume. Once that occurs, price should reflect back up to test overhead resistance. If volume is reduced compared with the test of that level previously (as it most certainly will be) price should be reflected back down again to test underlying support.
If that test is on reduced volume again and holds, price should reflect back up to do a volume test of the overhead resistance.
That's ping/pong.
The levels I'm watching for this to occur are a drop to around 2024 COMP by Wednesday, a rise to 2100 by expiration, and a drop to 2005 COMP by the end of July.
Here's the COMP chart. Note the indeterminate volume test (equal volume) at 2040 that reflected price back up. When price moved to 2076 this week, the volume was about 30% lower than the previous visit to that level, so price relfected back down.
Now, if we drop to 2040 COMP, that'll be a triple bottom, and we don't do that stuff, so we need to look for support below. Ideally, we'd go to 2024 COMP, as there is a lot of historic support as well as other support there.
We might not make it that far, but that's the ideal location for the next volume test. Since the candle that traversed the 2024 level on May 18 had about 2-billion shares, we'd likely reverse back up to test 2076 and 2100 as the volume would ideally be much lower on that anticipated test of 2024.
Since the 2030 level also had two volume tests already, I'd prefer 2024, but 2030 may end up working. Another possibility is that 2039 may work, and we kill the triple bottom on the next trip down to fill the gap at 2005.
This process also serves to help re-set the weekly indicators and allign the SPX, COMP, NDX, and Dow on the daily charts. It also works with expiration in July as well as symmetry on proposed inverse H&S formations.
It is also the only way we can get through 2100 COMP and go above when faced with the massive down volume off that previous high 2-weeks ago during a traditionally light volume time of year.
any opinion on this Gizmo--curious for sure it is. <<Posted by: ogm In reply to: federal reserves who wrote msg# 406004 Date:7/3/2005 8:25:03 AM Post #of 406016
NYSE members buy/sell. Another week of data confirms relentless distribution.
Sell-off creating extreme oversold would be more Bullish for summer than a rally here in the shorterm(2weeks or so). This week the market will decide--my indicators could bounce here OR bust to extreme oversold.
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