Wednesday, March 10, 2010

Morning Briefing for March 10th: Falling Into a Range

Notice how we sold off in the overnight session on Tuesday, only to sharply reject those price levels and trade to new highs for this most recent bull move. We then rejected those highs late in the day, and now we've settled in a range overnight between those levels. That 1140-ish area that was resistance on Monday is now a fulcrum for the current preopening trade. Note that we made fewer 20-day highs on Tuesday despite the move to price highs; we also had weak Demand relative to Supply, with both at low levels. (I update those data each morning before the open via Twitter). The weak Demand and Supply numbers are typical of a range trade, which could be an early phase of topping for this move. That would be consistent with the bullish sentiment noted in the earlier post.

On a day time frame, if buying cannot take out yesterday's price highs, I would be a seller for a move back into the range defined by the Tuesday lows and Wednesday highs. On a swing time frame, I'd be buying price weakness (and especially Demand/Supply weakness) for an eventual test of the bull market highs. Note how strategy differs relative to one's trading time frame. More on this later.