Will Santa Arrive This Year?

Focus: STOCKS

L.A. Little Image L.A. Little Contributing Editor, Minyanville

We had the opportunity to measure supply and demand at a place on the charts where significance was previously shown. Aside from some ambivalance, we mostly saw failure, writes L.A. Little on Minyanville.com.

Tuesday’s gap up came on light volume as compared to the anchored resistance zone it is coming into. Volume 40M shares as compared to anchored resistance bars of 75M and 70M shares. This comes after a decent consolidation period and after a large run off the bottom.

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(Charts courtesy of stockcharts.com)
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The fact that consolidation was witnessed prior to the gap up says that price can move higher and more testing may take place. The flip side is that the supply and demand equation says that the probability of a failure and retrace is much greater than a continued move higher. I believe people’s pocketbooks, and at this price point, people do not seem willing to write larger checks in order to purchase more equities.

Moving on to the S&P 500 (SPX). Here, too, there is some question about true intentions with Tuesday’s move higher setting up an ABCD up pattern that could potentially take the index back to the yearly highs.

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There’s only one problem: Tuesday was a test of anchored resistance, and it failed miserably.