By Mike Paulenoff, MPTrader.com
Even though it appears as if we're watching corn grow, which is how slow the market is today, this is a very interesting day when put in the context of the downtrend that's been developing since last week.
In particular, you had the E-mini March Nasdaq today decline to a new low for the move at 1469 ,. That was in the first hour, and then it whipped around to the upside for a vicious rally up 15 points to 1484-85. At that point it looked like the market was just going to keep going, take off, and just rip everybody to shreds, take the shorts out of the game and rip the market up to a level that would leave no doubt in our minds that the downtrend was over.
But a funny thing happened. The E-mini March Nasdaq ripped up 15 points, and then all of a sudden the buying pressure just evaporated. Here we are 4 hours later and guess what: We have come down to 1476 and we're kind of circling the mid-point range for the day.
The reason that is fascinating to me is because, firstly, at 1485 that was the beginning of important resistance which the index could have tried to break and in so doing would have damaged the downtend from last week. But so far it has failed to do any damage. Secondly, in terms of the profile we're accustomed to in this market after a decline, you would think that this would one of those vicious up-days after a move down.
Just using the Nasdaq, it peaked at 1563 and we got down to 1469 and change, and so far we've been able to rally 15 points. So you had a 95-point decline and a 15-point recovery so far, and it's been a feeble recovery at that.
It seems to me that not only are the bulls lacking power at this point, the bears and the downtrend are certainly dominant.
The question is what will happen later in the day. The last hour, which will be about an hour and fifteen minutes from now, will be the difference. Because if the bulls can put it together and rip to a new high for the day and carry through the 1500 level on the E-mini March Nasdaq, then you will do some damage to the downtrend and stand on the sideline in a neutral stance to see how much more damage the bulls can do.
But right now the bulls aren't doing any damage. It's the bears that seem to have a lid on the market. They are the ones in control.
Just a quick point about the pattern developed in the March S&P, it pivoted and ripped up from 1125 to 1133 roughly, and instead of consolidating and taking off, it pulled back to 1129 and can't seem to really get going again. It seems to me to be a countertrend move that either already has failed or will have one more rally attempt later in the session and then fail.