Yesterday's article is a bit amusing for saying that the market looked weak, then adding the
qualifier: for the near term. [See S & P - Market Still Looks Weak, Near Term, click on
http://bit.ly/9Sgnwn].  Just the day before was a long term perspective saying the market would
eventually retest the 750 lows, [See S & P - A Longer Term Outlook For The Market - Bleak, click on
http://bit.ly/c2XM9v].  We also added that for as bleak as that outlook was, it would take time, and
the market could enter into a trading range, first.

 As the market developed, activity was weak on the opening, and that was the extent of the "near term,"
for price then embarked on a rally that was 35 points higher from the low.  The fast turnaround also
speaks to the second paragraph that analyzed the small range Monday bar.  We said it could look like
sellers were unable to extend the range lower, but said that it was the buyers who failed to carry the day.

 It was both, and in that order.  The market did continue to sell off early, but by the end of the first hour,
buyers stepped in and took control, gaining momentum as the day evolved.  An anticipated support was
the 50% retracement of the 1050 area.  Once price held, half of the sort positions were covered at
1054.  That will be covered in the 60m chart.

 On the daily, the small bar from Monday helped lead to the dramatic turnaround, creating a wide range
rally bar with a strong close.  One thing about those kinds of closes, especially when going against the
trend, is that they can also be exhaustion-type rallies.  Rather than guess at what may happen, after
covering short positions and going flat, watching from a neutral stance is called for.

 Short positions were initiated on Friday the 16th, at 1074.50, just after the wide range bar that broke
the trading range.  When it became apparent that the 50% 1050 support area was holding, at least
initially, half positions were covered at 1054, just after the low bar on the chart.  As price held the small
rallies, intra day, a determination was made to cover the balance, at 1063.75, just two bars later. 

 The next bar retested 1060, and price never looked back.  The rally was steady and strong with very
little correction.  The final rally high bar that topped at 1085 had the highest volume of the last two days,
and the close was off the high.  This is a sign of sellers present at the highs, and a reminder that the
trend is down, and this is a counter-trend rally.

 This little review is to show how one has to be flexible in the markets and not be lulled when carrying a
position, long or short.  Paying attention to developing market activity is crucial to avoid costly mistakes
and to take as much from a position as the market allows.  Who would have expected, after a 35 point
drop on Friday when price failed at resistance, that two days later there would  be an equal 35 point rally?
 

 It does not change the overall picture, but it does say that nothing can be taken for granted.  In the end,
for every day, no one is bigger than the market.  By respecting it, one can consistently do well over a
period of time  and keep risks manageable.