Wednesday Evening 7 July 2010
Confirmation as to direction was resolved shortly after Wednesday’s opening.
Focus was placed on a 10 minute and a 60 minute chart, and we used both to
get long at 1034 after it was clear that the channel down was broken when price
closed intra day at 1031. The extent of the rally and ease of movement to the
upside was surprising. However, it occurred on less volume, and that tells us that
it was more of an absence of sellers, and a lot of short-covering. Because of that,
we opted to take profits on half of the position at 1054, during the last half hour
of trade. Stops have been raised to make the position not only risk free, but
guaranteed profitable.
Where to exit on the balance? As always, it will depend upon developing market
activity. Price closed in an area of resistance, and if there is an apparent reversal
of some kind, we will step aside immediately. How price reacts to the 1062 -1075
band of resistance will provide some clues.
Additional, important information will come in HOW price reacts on any decline.
If the ranges are smaller, in general, and volume drops, it will tell us that there
is still life in this developing counter-trend rally. The 1100 area is still a
longshot target.
The overall trend remains down, so loyalty to the long side will not be strong
because this is nothing more than an overdue correction. For now, there is a
free and profitable peak to the upside, and it came from exercising patience
and waiting for market activity to declare itself.
No random walk theory here.
