Buyers came out the second time bearish traders tried to flush weak stock investors out of the market about midday on Tuesday, triggering a late session short-covering rally which enabled the indices to close on their highs.

After an early morning short-covering rally, U.S. equity markets resumed their sell-offs, and made new lows about mid-session. The inability to follow-through to the downside scared shorts out of the market, triggering a strong rally that built upside momentum into the close. Fallout from the SEC/Goldman Sachs situation was the main reason behind the early session weakness in the U.S. equity markets. Last week’s closing price reversal top in the June E-mini S&P 500 was confirmed. This pattern sets up a potential break to 1178.75 but the strong close indicates it may take a day or two before the down move resumes.

Monday’s action took back about half of the break from the 1250.50 top in the June E-mini S&P 500. If this market is going to go down then look for selling pressure to begin between 1195.25 to 1198.75.