Louisiana-Pacific Corp LPX

S & P

[goldish]

by Michael Noonan of Edge Trader Plus may 10 Monday


What is key to focus in on, at this point, is to watch the developing market activity in the next severalweeks ahead. We want to know the quality and character of HOW any retest rally develops for thatwill determine how to take positions in the market to be in harmony with the developing trend.
The likelihood of a rally is strong here, on either chart, daily or weekly. What about the trend? Ambiguityis a fact of market trading. The daily trend can be said to be down, but we could see a sizeable rally toretest the April high, or more importantly, a test of the 1205 area where the last daily rally failed and led to the last strong decline. That leaves about 90 S&P points room to rally in a downtrend. It makes nosense to be short under this kind of environment, and that is why we said to be on the sidelines sinceFriday, [see S & P - The Lines Have Been Drawn, last sentence].
The probability of some kind of rally is greater than continuation down. If the weekly trend is no longerup, at a minimum, it will move sideways in a trading range before going down. That is the normalprocess of market behavior, and despite the price aberration from last Thursday, markets do move inidentifiable phases. What we have to account for and adjust to is how long it may take for a phase todevelop and run its course.
Like we said, the weekly time frame is not to be used for timing a trade, so no recommendation to buyor sell is made from this perspective. What we are doing is putting the factual observations into acontext in order to be able to make an informed decision using the lower time frames. Look for supportbetween 1056, more likely 1090-1110, and resistance starting around 1160 up to 1205.