The major indices were in the red all day today, ending the day with losses of ~1% each. The market is still well within its uptrend though. One thing that the bulls can be happy about is that volume shrank significantly today. That is a welcome tapering off after Friday’s huge volume. The Dow has slipped back below 9,000, but the NASDAQ found support at 1,600 today. I think that the critical level to watch is 965 on the S&P 500. It would be perfectly normal for that index to retest its breakout point, which is only 10 points away. The market may need to drop a bit past 965 to really test the resolve of the bulls — maybe to 950. I’m seeing signs of greed turning to fear, as evidenced by the number of evening star patterns (and pseudo evening stars) that I’m seeing today. Here’s the S&P 500 chart:
I think it’s also worth noting how relatively weak the Internet sector has become this month. Many of the stocks in that sector didn’t participate in the market’s run to new highs last week. In fact, they made lower highs vs. their May highs. That could just be a sign of rotation into other sectors, but it’s something I’ll be keeping an eye on. Here’s eBay’s chart as an example:
