Tuesday Evening   7 September 2010

 It can be readily seen from the weekly and the daily charts that price is currently in a trading range. 
What can best be said about trading ranges and that the level on knowledge is at its lowest, for price
can go either way.  With odds at 50-50, there is no edge.  The message, for anyone who does not want
to lose money in the markets, is to NOT participate when there is no edge.  Just that little rule alone will
improve the win/loss ratio.  If that rule in not in your arsenal, you would do well to add it.

 Back on 29 August, our article stated: Market Dictates Flexibility, [http://bit.ly/9UuoMU], where mention
was made of a potential rally to 1130, but all identified within a larger trading range.  Just as it looked
like sellers were about to rout the buyers, a few days of strong buying volume saved the day, last week.
The weekly chart shows last week to be a key reversal to the upside as price rallied without respite for
3 days to close on the high.  Will it have follow-through?  It should, but that is just an opinion, and the
market has been known to ignore what we think.  We cover the trading range on the daily chart, next.

 Worth pointing out is that fact that when the 1200 level gave way in 2008, from the last swing high to
the low on March 2009, the decline covered 29 weeks in time.  It has since taken 59 weeks, twice as long,
to recover the decline.  Contrast the wide range bars as price declines, showing greater ease of movement,
with the smaller range bars throughout the Federal Reserve-sponsored POMO rally to the April 2010
highs.  [POMO = Permanent Open Market Operations].  Even with all the fiat the Fed threw into the
markets, the going was labored...relentless, but labored.  Since the April high, see how the character
of the bar ranges has increased, once again as price declines.  Just an observation.

 The failed rallies in June and August are close enough to the halfway point, and it is that dreaded middle
of the trading range location where the level of knowledge is at its least.  Even though the overall trading
environment is negative, the strong volume and three day rally gives the last edge to the buyers.  What
is needed now is for buyers to demonstrate they can continue to control the market, and it will take more
than a concerted effort, given the levels of resistance that must be overcome. 

 There was some give-back today, and it may be just a normal correction.  If the correction lasts for just
another day or two, and the ranges get smaller with decreasing volume, and if price can hold the 1076-1080 level, there may be cause to take a long position.   That is putting the cart before the horse, but
it does outline a plan, should activity develop in that manner.  That is not a prediction, rather it is an
"If this, than that" idea.  If "this" does not happen, "that" is no longer a consideration.  Simple as that.

 Like we said last week, one must be flexible as the market meanders up and down in this trading range.
At some point, there will be a better clue as to market intent.