Thursday Evening  8 July 2010

 A long position was taken at 1034 on the intra day upside break out on Wednesday.  Half the position was liquidated at 1054 near the last half hour of trade on the same day.  Our initial target was 1067,
[See S & P - Targets, click on http://bit/ly/bk6bu2.]  The high was 1067.

 We opted to stand aside, exiting the second half position at 1064.50, on Thursday.  Once the objective
was reached, it was clear from the lessened volume that the current counter-trend rally was short-
covering and a lack of demand.  There is no reason, as a matter of course, to maintain a position that
has questionable signs of strength, or lack of, when going against the primary trend.

 It is also apparent from the daily chart the rally to 1067 was a narrow range bar.  The narrow range is
an indication that buyers were not strong enough to extend the range higher, and that backs up the
assessment above.

 Interestingly, once price sold off from the initial resistance, the reaction was limited to the downside,
and volume did not pick up.  This tells us that sellers were absent, as well.  As long as sellers are not
present to  push price lower, the rally will hold, and it did.  Still, the character is weak, and the weakness
flies in the face of a down trend.

 If selling enters and volume picks up as price declines, it would be a shorting opportunity to sell against
the half-way retracement.  Watching how present tense market activity develops on Friday may provide
a clue.  If price holds and the range is small, it will be a negative indication for longs and an invitation for
sellers to eventually enter and resume the downward momentum.

 Price could have a retracement back to the 1055 area, and if it holds, the rally may have a new life.  This
area is reaching a critical stage, for if price cannot hold and strong selling comes in, the next wave down
can be more of the same caliber of weakness seen since the April high. 

 Caveat Emptor!