The bearish and unhealthy market structure I mentioned yesterday proved to be a good signal of the selling that came today. Several times the bulls tried to come in and rally this market from the lows like they've been doing the past few weeks, but for the first time they failed and the market closed near the lows. NYSE breadth was fairly weak, but nothing impressive. But that's expected now because declines essentially are against the larger trend now, which is up. Also note on the above 4hr chart that this decline came after touching and reversing at the upper end of the parallel trend channel I drew. This may be a clue that index will charge lower toward at least the lower trend channel area at the 800.
One thing that's also important to note in my view is the lack of progress this rally has made in recent weeks. To me, it feels like this market has been on absolute fire the past month. But if we take a closer look, that's not the case at all. As a matter of fact, the S&P futures closed at 827 on March 26th, and as of right now, the S&P is trading only 7 points higher almost 3 weeks later! So even though this market feels like it's been on fire the past few weeks, it's actually done very little. This is following a huge 25% straight line up rally from the S&P cash lows of 666 mind you. So again, as I've been pounding the table about lately, this market action is telling us it's topping, and will roll over soon.
Bottom line: I remain short the S&P, XLF, various individual tech stocks (CSCO, INTC and ORCL) and gold through bearish put spreads. It appears the S&P futures will move toward at least the 800, but most likely break that and head toward the 760-780 area.
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