Tuesday Evening 15 June 2010

 Just when it looked like the trading range was alive and well after Monday's failed rally at the high end 
of the range, and the poor close suggested further weakness into Tuesday, price reversed course and
embarked on a  steady rally into new recent high ground.

 What do we now know?  We know we have to be flexible, at all times.  What was expected as a retest
lower became a turnaround.  The rally was the fifth day with a strong close.   This is the first time for a
five day counter-trend rally.  Normally, counter-trend rallies last 1 to 4 days, so today marks a change
of behavior to the plus side, for now.  The close is the highest for the month of June and the highest for
the past four weeks, another plus to the upside.

 Look at the weak close from Monday, second to last full bar, and the weak close three more bars earlier.
Twice, price closed weakly, and twice, price failed to go lower, but reversed and made impressive rallies.
All of these gathered facts tell us not to be short, which of course, we were not.  We were long going
into the high of the range on Monday, but accepted profits prior to the turnaround and the lower end
close.

 The momentum has shifted.  Just a day earlier, it looked like the intra day trend was to turn down.  The
current rally can run into resistance at the 1020 area, not too far from Tuesday's close.  1020 is the close
from the 6 May huge decline day and also the high of a small bar day that led to another sharp drop in
mid-May.

 What do we not know?  We do not know for how long this rally will continue.

 Mention was made that the kind of volatility the market was showing is often a form of distribution,
selling by strong hands into weaker buyers who are late comers.  [See S & P - The Message Of The
Market Is Clear, click on http://bit.ly/9TJdpn,
fifth paragraph].  What will be key from this point on is follow-though. 

 If the rally is to continue, we need to see increased volume on rally bars with upper range closes.  This
will tell us that buyers remain in control.  If that does not happen, caution is warranted for longs.  If any
decline is controlled with smaller ranges and less volume than the rallies, it may be a buying opportunity. 
Should any decline develop with wide range bars and increasing volume, it could be problematic for the
upside.

 Is there a clear direction to recommend?  No, at least not until developing market activity shows HOW
the then direction is unfolding.  Nothing can be taken for granted.