We formed an inside day. Technically, the market can go either way, but it usually marks a period of consolidation which marks a continuation in the trend. The market (SPX, DJIA, COMP) is sandwiched between the 30-day MA and the 50-day MA and there's going be more neutral trading.
I stated that I was not convinced of this rally and I'm still not convinced. However, this doesn't mean that the bears are at an all clear right now. Canceling out yesterday's gains was Step 1. Step 2 is to break down below the 820 support level and today's action has made that probability slightly higher.
I'm still not convinced. That was a terrible rally with too much weakness on low volume. Was that a rollercoaster ride or what? You either sat in cash, day traded, or sat through it all. I told you. If we didn't get a 4-5% up day today, then the chances for the market's survival diminish significantly.
Looks like we're in a bear flag or a rising wedge (close-up view). This pattern usually spikes higher and moves laterally toward the top of the flag/wedge and then falls off a cliff quickly. The volume should also be decreasing each day (regardless of whether it's a holiday week or not).