Out Comes The Sellers

This morning it looked like the bulls were taking total charge, gapping over 877 and taking us above yesterday's high. the "buy now before it's too late' mantra was probably being repeated over and over on CNBC, just before the rug got pulled out from under us. It didn't take long for 877 to fall, and we never got back above it. Unfortunately, there is just as much price congestion above 877 as below (the highlighted areas), and I don't think this rally has enough juice left to get through it.

The Nasdaq came out of the gates and headed right for the 200dma, coming within 5 points before pulling back. Today won't count as a distribution day because the close was higher than yesterday's, but it does look like distribution.

The Russell 2000 dropped like a rock during the pullback. If I was tempted to go short today, it would be here.

The Dow industrials have yet to clear the first area of price congestion. I am already hearing calls for re-structuring the Dow, as if that will improve conditions in the market. Hell, I'll bet there are 30 penny stocks on the pink sheets that are outperforming the Dow stocks.

New highs on the Nasdaq, with the new highs on the NYSE in the top panel. We are finally seeing improvement, especially on the Nasdaq, with today having the highest level since September.

The best case scenario, as far as I am concerned, is a pullback, on average to light volume, that lasts a few days. Watch for stocks, especially those on the relative strength list, that don't pull back. If the market takes off again, those will be the leaders. If we don't get a pullback, but continue to push higher, paradoxically I would consider that more bearish, as that is panic buying by the dumb money, and the big money boys are just waiting for the suckers to jump in.

I'll have the new highs and earnings update shortly.