Tuesday Evening 1 June 2010
The Trend. The Message of the Market. Opportunity. This pretty much
covers the importance of what leads to consistent trading results. We have
been reluctant to go short simply because of what appears to be buying at
these lower levels. On 24 May, we expected at least a retest of the
February low, [Article, S & P - The Market Is Showing Its Hand, to view, click
on http://bit.ly/9PpjCm] In addition, resistance was identified starting at 1089 up through 1123, [3rd paragraph].
After a week ago Tuesday's retest of February's low, we characterized
buying at the low, and more buying on the following Thursday retest of
Tuesday, [see S & P - Heed The Market's Message, to view, click on
http://bit.ly/bi4LtH, the first paragraph referenced the Tuesday low, and
the second paragraph discussed a change in volume behavior].
It is for all of these reasons we have chosen not to go short, yet. The
market is in a retest of the lows mode, and there is no way of knowing
whether the previous Thursday low will hold, the lows from the 26th, or
perhaps tonight's slightly lower low going into Wednesday's day session.
Plus, the last month's decline has fulfilled the downside targets, so that
energy has been exhausted, for now.
Frankly, we are looking for a low risk buying opportunity. We continue to
watch results, not just price,and the S&P is making higher lows, still, and
that indicates the potential rally to which we allude, with a target between
1106 to 1123. There have been intra day rallies, but none have held as
they lead to weakness by the end of the trading day. All this is telling us
is that the retesting process is not yet complete.
So we wait.
Evidence that the sell-offs have ended, coupled with a sign of a turnaround, starting on an hourly chart that may also turn the daily trend to point up, at
least for a spell. The overall, broader trend points to eventual lower prices.