Wednesday  4 August 2010

 Since the last article, in what was construed as a key resistance area, the market has ignored that
potential resistance and continues to hang just under the 1031 area, which is the 21 June high, and under
the 50% of range, around 1035, as additional potential resistance.  The downside anticipation we were
looking for did not materialize, and we ended on the wrong side of the market, up until Friday.

 The chart below shows activity about 30 minutes before Wednesday's opening.  Price is hovering around
the 1120 area, on a closing basis, and this can either be a pause, leading to higher prices, or the start of
a turnaround.  We favor higher, without knowing how much higher, because there is no ending activity to
the current rally.

 There is also a reverse trend line, [RTL], drawn off the July highs, extending into the future, and that
resistance dovetails around the 50% of range area.  This is a point to watch HOW price responds/reacts
to it, IF the rally gets there.  We may learn how strong or weak the market is from the response.

 Volume has dropped, and a few reasons may account for that, Summer vacations being one, but the drop
in volume occurs as price is trying to rally.  This is more a function of a lack of demand.  This less than
strong reading remains in context of the 11 days down from the 21 June high to 6 July low, with the rally
now in its 21st day to yet reach the previous high.  The rally is taking almost twice as long to recover, and
that, too, is a part of the evolving story.

 We are watching developing market activity, in light of the above analysis, waiting to see if price will fail
slightly higher, or if it can build a larger base for more upside continuation.