Good Morning, Traders. Well, we said yesterday that something was going to happen an it did. Problem was, two things happened. We expected a breakout of the last three days range in either direction and we got both! The intraday 15 minute chart of the $SPX above shows just how rollercoaster the action was in both directions. After a rally in semiconductors pushed all three major averages out of the consolidation area, bears came out in full force at 1pm EST and promptly knocked them all down below it. Breadth quickly turned negative and closed about 2 to 1 negative on both the NYSE and Nasdaq giving the market a solid distribution day. Advance decline lines closed strongly negative as well, with declining stocks outpacing advancing stocks by a margin of 1482 on the NYSE and 1043 on the Nasdaq. Readings of -1000 or worse on the advance/decline line are considered significant and are symtomatic of strong across the board selling. This sort of continuation of trend and then swift reversal is relatively bearish in the near term and certainly confirms that the market is just not ready to advance just yet. Overall bias remains up with the nearterm bias sideways to down.

Peter Reznicek is the Chief Equity Strategist and a principal of the Prana Fund, a domestic hedge fund, and ShadowTrader, a subsidiary of thinkorswim which provides coaching and education to its clients on both intraday and swing trading of equities. For a free trial to the full version of The Big Picture or to learn about ShadowTrader's other services, visit shadowtrader.net or send an email to preznicek@shadowtrader.net.