Wednesday Evening 25 August 2010

The market reached one of the downside targets, the 1040 level, even slightly exceeded it for nothing should be taken as absolute, and from that level of weakness, buyers stepped in and price closed higher
on strong volume. [See S & P - Go With First Impressions, click on http://bit.ly/cJfBxD, third paragraph]. 
The point to keep in mind is that this is but a rally within a down trend, and it will be limited.

Wednesday's volume was the heaviest for a rally bar since 7 July.  Whether that will have an impact on
the extent of a counter-trend rally remains to be seen.  It is clear that price is in a down channel, and the
somewhat oversold condition stopped near the lower end of the channel and near the May low, 1032.75.

The anticipated resistance can start around the 1066 to the 1072+ levels, which also is near the upper
channel bar off the recent highs.  What we will be looking for is where any potential rally may end, and
there will be clear signs...smaller range bars on decreasing volume.

A point to make now is drawing attention to the broader trading range from mid-May to date.  One
technical measure used to gauge how far a market may correct, or rally, is taken from Point & Figure
charts.  The count, or measure of a potential directional move, from this trading range is quite large,
and it puts the downside potential well below the March 2009 lows around 680.

We see this as a bear market and seek to sell rallies, only.  Caveat emptor.