Thursday  Evening  24 June 2010

 Once the S&P put in a surprising 6 day rally, it changed the complexion of the down trend and gave new
expectations for upside potential.  There was now potential for a rally to 1141, to as high as 1170, and
that had to be respected.

 Monday's failure rally after the large runnup put a damper on the upside, but it needed to be proven.  The
wide range decline on Tuesday helped that proof along, but Wednesday's lower volume, smaller bar and
mid-range close suggested price was stopping at a possible support area, with another support just under
that low, both suggesting caution to the short side.

 Or so it seemed.

 Thursday's continuation down kept sellers in control as price held the half-way correction point only
briefly before giving way.  All rally attempts on the way down had been anemic, but selling volume was
not that convincing.  Still, price declined convincingly 63 points from Monday's 1129.50 high.

 Not once did we get short as we waited for  a larger counter-rally that never came.  Prior to the 1183
area, there was no sound reason to be short, not in light of that area holding previously.  Once it was
broken, then the requirement of a failure rally failed to occur.  As a cautious result, we missed this decline.

 It happens.  Now what?  There is no greater bull than a sidelined bear, so we have been eagerly awaiting
a rally.

 The 60 minute chart shows a clear trend down, in a neat little channel.  After three days of lower lows,
the volume activity going into the close suggests  the potential for a rally.  It looked like the 1070 area
would hold, mid-morning.  Not a chance.  After another weak intra day rally, another low was created. 
The reasoning for the outlook behind the 1070 low holding was the increased volume, the largest on a
10 minute bar for the whole day.

 Going into the last hour, volume picked up as price declined to yet newer lows, and it is apparent that
the last hour's volume was the highest of the day, even for the week.  It is possible that it was what is
called stopping volume.  Note how high the volume is, and then look at the size of the range.  The sharp
increase in volume activity is disproportionate to the smaller range.  It says buyers,[short-covering], were
present to prevent the range from extending further down.  A 10m chart will show it even more.

 The 10:00 a.m. low had the potential for holding up until the last bar before 2 p.m.  The 2 p.m. bar
closed on the low and gave scant hope for the 1070 area to be the day's low.  What developed after
that time became very interesting.  At 2:10 p.m.  there was a new low on increased volume.  The sellers
were totally in control, and more downside could easily follow.

 Now you will get to see what is meant by stopping volume.  The highest 10 minute volume bar in the
past week produced not a new low, not a bar with a low-end close, but a retest of the previous low and
and a higher end close.  The only reason why the close was upper end was because buyers stepped in
and bid up the price. [We say buyers, but in the form of short-covering, not new demand].

 The sharply increased volume stopped the decline.  Keep in mind, price is down three days and 63 points
with hardly any counter rally.  We are of the mind that the odds have increased for the beginning of a
short-term market trend change, based on an hourly chart.  "Bear" in mind, this has to be proven by a 
rally on increased volume and a higher swing low.  If this does not happen, price will continue lower.

 Still on the sidelines, but drawing a bead on developing market activity.