Really Fat Pizza, page-817

The XJO closed modestly lower on Wednesday, where the Index did not close substantially below Tuesday's close, and in turn did not confirm Tuesday's bar as certain weakness.
It seemed like some form of equilibrium between supply and demand was reached today.
There does appear to be more supply (resistance) than I expected around this ~5300 level, especially as some decent work has already been done over the past couple of weeks attempting to absorb this supply.
At the open today, price came back a little in sympathy with overnight trading (where strong early gains were eventually lost).  
I don't think there was any serious supply drawn out as price initially came back locally, and in response to the modest supply the absorption process got underway again.
Price then ground its way back up and into positive territory, but once over ~5300, increased supply was again drawn out, which pushed price back down into the close.
As usual the response tomorrow will confirm, but at this stage I expect today's trading can be considered as more ongoing absorption, and not yet serious weakness.  The time taken at this (important) level is beginning to become a concern though....
Note - if the resistance (ongoing supply) around the ~5300 level cannot be overcome or absorbed in some reasonable amount of time, price will likely pullback sharply or shakeout in response.  This will be an effort to challenge the sellers to come out and complete their selling.   At that point, if supply continues to chase price down - or completely overwhelms demand, the Index becomes vulnerable to another price failure and potentially a further breakdown.  
An initial break and close below ~5000 would leave price vulnerable to a price breakdown - that is not to say that 'if broken price will breakdown', but that the market becomes 'vulnerable' at that level, and should supply be just a tad stronger than demand at that point, it may be enough for a cascade (or domino effect) lower to begin.


cheers

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