Please enlarge and click on the chart of the daily Dow. The average remains in its trading range. Today was an inside day with very low volume and a low end close. Volume today was almost half of what it was 5 days ago when this small uptrend began. We will have to see whether today was lack of demand at the top of a trading range or a lack of selling on a down day. Inside days can be very hard to evaluate.

The point and figure of the Dow in addition to all that we noted yesterday has come to an apex, possibly, which holds the possibility of a move. While somewhat supported on the hourly pnf chart of the SPX, the apex is clearly visible on the 5 min pnf of the SPY where each box is the average true range. Note the clear apex at 86.06. We have a clear pattern of lower highs indicating increasing selling pressure. The last rally to 86.32 was 50%, so the average is hugging the lower half of this small 2 day range. A break can be anticipated at this point.

Please open the 5 minute bar chart. I continued labeling the short covering rallies. Today they managed to move the markets to two lower highs with less volume, drama and histrionics than Friday. The decline from 87.01 to 85.54 was orderly and determined selling accompanied by gradually increasing volume. After the selling climax at 85.54 there are a t least 2 and possibly 4 sharp short covering rallies forming our friendly megaphone. These buying sprees are clearly stuffed and if you go through the last two hours bar by bar you will see the selling is greater than the buying. From noon on then the selling dominates the buyers. The short covering does not seem to be able to hold the market up much longer.