Market Comment 07 08 10

Wednesday’s short covering rally was strong.  Short covering rallies tend to be very strong, but short lived, unless there is follow-through buying  to keep it alive.  The market is still in an intermediate downtrend. At this point we have no way of knowing if the current rally will be sustained. Downtrends are made up of a series of strong down-legs interrupted by weaker up-legs.  Uptrends are made up of a series of strong up-legs interrupted by weaker down-legs. It is the shift in the relationship between up-legs and down-legs that alerts us to the possibility of a true reversal in the intermediate trend.