Yesterday’s strong down close violated the recent uptrend I highlighted yesterday and brought the market into an important support area.  Technically, the market was certainly overbought and primed for a pullback, so this move should come as no surprise to anyone.  We would normally expect some downside followthrough after such a weak close, but it is important to realize that the market pattern in a strong bull market is this:  tempt the bears, reward them minimally, and then punish them with complete lack of followthrough!  Be flexible in your bias today.

It is also important to remember that much of yesterday’s market move (and weakness across the board in commodities) was probably linked to US Dollar strength.  This was a first bounce in a strong downtrend for the Dollar, so we are also careful not to expect too much followthrough there.

SPY watch 116.70 as key inflection point.
118.30
118.70
116.00
115.60