monday comes

An interesting and perhaps key feature of the dow is that it has exceeded its supply line, that is, the line at the top of the trend channel that has defined it since the march lows. In the past this line has been the point at which supply exceeds demand. The dow can only be sustained above this line if the buyers remain ver committed. As soon as the buyers show weakness, the sellers will gang up and drive the price down. DOW is also now overbought on the rsi. So, trading from here - the bulls need to prove themselves every session.

Note that at the end of its session ftse turned down from a supply line of a different kind - the top line of an upward sloping wedge (join highs of 12/3 and 23/3), through) which had previousl been breached but was not able to be held. There are some other supply lines that also meet price at about 6500. Note too that ftse 6486 is also a significant line of resistance from the last high in 2000. In this instance, however, ftse supassed that level before closing at it. One might see the closing move as a bullish retest of that level - especially snce ftse is not overbought on rsi.

xjo on Wednesday has also turned down from its supply line at the top of the trend channel. The supply line is now at about 6290. There is also another long term supply line for xjo dating back to March 2004 that now meets up with price at about 6265. This has never before been breached. However, xjo is not overbought so these resistance levels may be overcome but again, the bulls now have to prove themselves in every session if these supply lines are exceeded.

A conclusion ? There is ample evidence of trend accelleration greater than any previously evident in this bull run from 2003. Any weakness by the bulls above the supply lines is likely to be more severely punished than before as sellers will be looking for opportunities, so - assuming xjo does exceed the lines - volatility is probably going to be a continuing feature of trading until the next correction low.

Is THE top near? I don't know but I do expect we will see increased signs of weakness and vulnerability as the days progress. The bulls are in control but they are now driving through bear country, if you like.