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S & P - Rally Into Resistance. Trend Is Still Down

Thursday  13 May 2010

 Dealing first with the trend, the daily remains down, the hourly is also still
down but in a rally phase.  We are looking for a turnaround to head lower. 
The initial resistance around the 1169 high did not hold.  In fact, we went
short on Tuesday, saw good movement down in overnight trade, but got
stopped out for a small loss after the day session opening as price
continued to go higher for the balance of Wednesday.

 Looking at the HOW of this rally, it is not overly impressive.  The ranges for
Tuesday and Wednesday are progressively smaller, showing an inability or
an unwillingness for buyers to press their cause.  Also, volume was lighter
on Tuesday, and even lighter on Wednesday.  The strongest volume effort
shows up on the down days, so the character of price activity remains
negative.

 On the upside, however anemic the rally may appear, sellers are also not
responding by coming in and pushing price lower.   What we are looking for
is a sign that price is about to turn and resume the downside.  Developing
market activity, while up, is acting in a counter trend vein, but as we remind
everyone, anything can happen, and trends change.  That is not a backdoor escape for taking a stand, but just an acknowledgement that flexibility is
always required.

S&P 120m 13 May 10