Here is why:
As the market consolidates right at key resistance, we can see that for two days in a row we have touched the resistance level on the dot, closing slightly below resistance while consolidating perfectly.
Notice how the daily ranges have been contracting on the way down, with today continuing that trend as we experienced a range day that was less than 50% of yesterday's overall trading range.
What does this represent?
It represents bidders remaining a dominant force in the market.
When bidders disappear during a pullback you see large ranges with sloppy price action along the way.
When bidders remain a dominant force in the market, you see tight ranges with clean price action as those bidders are consistently deploying capital, efficiently cleaning up any mess that sellers attempt to leave behind.
Put as simply as possible: Bidders remain a dominant force in this market. What that means is that all the fear based nonsense you hear about the markets being on their last leg, this being a suckers rally, bear market remains intact, a recession is around the corner and so on should be muted.
What is important are the capital flows. And according to everything that price action is telling us, the flows remain very bullish.
This is but one of the many bullish indicators of what is to come.
The horns are getting sharper by the day.
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