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.
