Two days ago Swype has been updated fixing a number of bugs and making the tweak works exactly like in an Android Phone.

Swype Beta 1 was missing the blue trace line that moves from one letter to another assuring you that you typed correctly. 
If you already have Swype Beta 1, You can easily upgrade it to Beta 2. If not you can just install it from the repository wynd.x10.mx/repo
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