Good Morning, Traders. Some bullish action (sort of) yesterday as the Dow put on 82, the S&P added almost 8, and the beleaguered Nasdaq Composite limped forward by 9. Divergence internally on the NYSE vs the Nasdaq and in the major averages ran rampant. Moreso than we have seen in quiet some time. At one point during yesterday's afternoon trade the Dow was ahead by 55 points while the Nasdaq was still in the red. Holy cow! This is exactly what we mean when we keep harping on the fact that the market is not hitting on all cylinders. Internally, breadth was divergent for large portions of the day and when all was said and done closed 2.64 to 1 positive on the NYSE side of things and 1.43 to 1 positive on the Nasdaq. Overall volume contracted a bit with a decrease in turnover of 6% on the NYSE and 11% on the Nasdaq. Both should be noted since we want to see increases in overall volume whenever we get an up day. Take note as well that overall volume climbed on Tuesday when we sold off hard and closed at the lows. Advance decline lines were a little more positive and in sync, closing +1224 on NYSE and 866 Nasdaq, respectively. Pharmaceuticals, Coal and Biotechs were the leaders on the Core List but daytrading opportunities were few and far between as earnings from some big names only gapped up and went sideways. NKE was an exception to the rule and gained strongly. Today may bring some better intraday volatility as ADBE missed afterhours which could shake things up a little in the Nasdaq which refuses to move as of late. Although we did advance a bit in yesterday's trade note should be made of where we retraced to which brings us to the chart above. The "rally" of yesterday took us right back into the tight range of March 16th to March 21st. As we fell down below this area, it may well resist us going forward. Remember that one of the basic tenets of technical analysis is that markets move from one area of congestion to the next. When they break down through a congestion area, an ensuing rally very often brings the market back to the lower end of that area which it uses as a reversal point. Today will be very pivotal in deciding where we go from here in the near term to see if the circled area to the right which was old support does indeed become new resistance, or if we power on through and retest 1310 on the S&P.

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.