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S & P - A Trading Range - Nemesis For Trend Trading. It Requires A Different Mind Set.

Thursday Evening   22 July 2010

 The short position we so strongly "argued" for turned into a loss,
[See S & P - Weakness Keeps Showing Up, Click on
http://bit.ly/cH4aq4], and we were at a loss as to how we missed
seeing such a strong reversal potential.  The answer most always
lies in how one is viewing a market.  For us, the trend has been
down, and it is.  However, for the immediate time, it is really in a
trading range, with another trading range within it.  The chart
shows this, below.

  The June 1130 high is the upper range, and the July 1002 low
identifies the lower range.  For the last several days, where we
had been seeing weakness and an eventual decline, another,
smaller trading range has developed.  1100 marks the high end,
and 1052 the low end.  This was hard to see after the decline on
Wednesday, mainly because Thursday had not yet occurred.  In
defense, and often in truth, many phases of the market cannot be
identified until after the fact.

 It turns out that Wednesday's decline was a retest of Tuesday's
Outside Key Reversal.  Once trade gapped open higher Thursday
morning, the rally was unforgiving for the shorts.  Resistance had
still not been violated, and buyers still had to prove their standing. 
Well, buyers did just that.  The sell-off at the close was profit-taking,
as opposed to new selling.

 There has been no apparent ending action to this rally.  That may
change tomorrow or next week, so until it does, we have to go with
what is.  The past several trading days has been like pushing on a
string for both buyers and sellers.

 It is as simple an explanation as we can offer.

S&P D 22 Jul 10