caylus's - exciting long red bars - tuesday, page-18

Shortened commentary this morning. America closed for Labor Day holiday.

Europe:
France -4.73%
Germany -5.28%
London -3.58%
Gold in U.S. Dollars is up +0.67%. Gold in Oz Dollars is up +1.38%. AUD/USD fell to finish at about 105.3.

Notes on the French CAC chart: This is the third time since early August that the index has been down around the 3000 mark. On each occasion volume (see lowest pane on the chart) has been lower than the previous time. There?s not a lot of conviction in the selling. But, as yet, no real sign of volume coming into the market. It wouldn?t take much to turn this market to the upside ? but it hasn?t happened yet.

I was asked a question about my recent assertions that we could see a test of the early August lows ? and did that mean the very lowest point of the candle back then. From the CAC chart you can see that such an event could easily occur. The lowest point of the early August low is not far away.

Such assertions don?t have a high degree of particularity about them ? they?re meant to be ?abouts? ? as with all assertions regarding support and resistance. It is common for markets to overshoot and undershoot support/resistance levels. So ? once a chart gets to ?about? a level ? either just above or a bit below ? look for a reversal action. Often you have to wait for the next day to be sure of what is happening. Look to volume for further clues. Slowing of volume as an important support/resistance level is approached suggests that the level will hold. You still might get an undershoot or an overshoot ? but the volume often provides an important clue as to what the ?smart money? is thinking at that level. It usually takes a bigger effort (higher volume) to break through an important level. So, if volume is dropping off at around that level ? then there doesn?t seem enough conviction to break the level and the market will reverse.

We shall see what happens in this case. There are no givens in the market. It?s a tough place and not for the faint-hearted.

Good luck
Redb