Wednesday  23 June 2010

  Too many try to be ahead of the market, and that is where the risk is the greatest.  Better to be a step
behind, just after a potential situation becomes clear.  There is usually a give-up in some price advantage,
but the advantage of being in tandem with the market direction is worth the wait.

 Monday's strong opening led to a substantial sell-off, creating a failed upside probe.  What is a probe?
In the chart below, it is a rally above a previous resistance that looks to see what kind of buying exists
above.  Obviously, buyers were not present, so the market dropped back under resistance.  Volume was
not particularly high, so we attribute that to a lack of demand that gave way to sellers being more in
control, almost by default.  We also know that whatever buy stops above that area have been taken out.

 The strong volume, ease of movement up bar, 10 June, has been emboldened to have it stand out.  A
50% retracement of the 8 Jun low-21 June high falls right at the high of the 10 June bar.  When there is
that caliber of a demand rally, [demand because volume increased], buyers will defend it, starting at the
high, to as low as the low.  Where any retest of the bar will stop depends on the market conditions. Right
now, there is ease of movement down, evidenced by the wider ranges.

 The 1100 - 1105 area was potential support during Tuesday's trading.  It finally gave way in the last hour
and a half of trade.  It would not be prudent to go short, at that point, because of the potential support
from the 10 Jun high that is also a 50% support.  As we said, follow the lead of the market instead of
trying to anticipate the unknown.

 We want to see if the 1083 area will hold as support.  If it does, a buying opportunity may develop.  If it
does not, then we can look for a weak rally to establish a short position.  There are so many variables
that one has to be flexible and let the strongest moving force of all, the market, be the final arbiter.

 No position.