Thursday  19 November 2009

We mentioned yesterday that buyers would not be able to stave off sellers for forever, and selling
entered the market right out of the gate on Thursday as price gapped right through support lines.
The 60 minute chart shows how the high of the day was the open, [Day session].

The sell-off occurred on a wide range bar, showing ease of movement to the downside.  The close on
that bar was not as weak as sellers would have liked, especially on such strong volume, and that
augured a potential rally of some kind.  As price then traded sideways for the next five hours, it became
apparent  that supply selling had dried up, and that would prompt some short-covering.  The end of the
day rally reflected just that, short-covering.  It was not demand buyers coming in.  There is a qualitative difference.

The S&P is likely expanding the current trading range, and lower support would be the 1082 area, and
1075 under that.  Where price will go and/or hold cannot be known in advance.  All that can be done is
to respond to the present tense market activity, by going short this morning, and then see to where it
leads.

The support channel line was in jeopardy the past few days, seen just above today's gap lower as price
was trading through and under the channel line.  The lower opening is entirely under the support
channel  line, and that puts the daily trend back into a trading range environment.  The intra day 60
minute chart now has a selling wave underway.

Friday is end of week, and the current weekly range is also small, not a positive statement for a bullish
scenario to continue.  Just as the last few small range days led to selling, a poor close on Friday can
translate to sellers in the weekly time frame.  Last Friday's close was 1091.50.  A close at or under that 
level will  make it more difficult for the buyers to retain control.

Short, for now.

Stay tuned.