Closing Stats.

Today we have a dominant Price/Volume Relationship: Close Down/ Volume Down, it was nearly double the second place relationship (of 4) which was close down and volume up.

The Dow had 28 stocks closing down (23 in the dominant P/V relationship) with only 2 closing up-KO and AXP.

The NASDAQ 100 had 72 decliners
The S&P-500 had 402 decliners
The Russell 2000 had 1461 decliners.

Ultimately, this is exactly what 3C had been showing us yesterday and throughout today.

Only 26 of the 239 MorningStar industry/sub-industry groups closed higher. The leaders were: Auto Dealerships, Gold, General Contractors, Air and Freight Delivery (remember the strength in transports today), Broadcasting/Radio, Printed Circuit Boards, Specialty Eateries, Beverages/Soft Drinks (KO), Residential Construction and Non-Metallic Mineral Mining.

The biggest losers included: Wholesale Building Materials, Electronic Stores, General Entertainment, Textiles/Footwear, Toy and Hobby Stores, Office Supplies, Research Services, Music and Video Stores, Internet Software and Services and Hospitals.

Here's a look at the SPY...

 Price Down/Volume Down is the most common price/volume relationship during a bear market. However, today's P/V relationship didn't bother me too much. Typically major reversals have high volume, so if we were to see Close Down/Volume Up, I would be worried. In the red boxes, you can see several days in which "Close Down/ Volume Up were the dominant relationships, in this case, I view it more as a pullback in which volume should contract. Also note that this occurred at the resistance level hit yesterday when I first started talking about the market being in need of  pullback.

 Remember, resistance is an area, not an exact level, and this is the area resistance is to be found.

 The 15 min negative divergence which started yesterday was a pretty sure fire signal that we would see a reversal to the downside, 3C performed well in showing distribution.

 The bigger picture remains this 60 min. chart which is still extremely bullish and has not deteriorated.

 I posted some pullback targets yesterday, but this is my revised view, this is a 50 bar moving average on a 60 min chart.

 The 10 min Bollinger Bands shows typical activity of a market bouncing between the bands. Today's decline walked the lower band which is a sign of strong downside momentum. Note my Demark based custom indicator started giving a buy signal today, I imagine it will go on a bit longer.

Here's the daily Bollinger Bands, in the red box you can see the average walking the lower band, this is strong downside momentum. In the green box, resistance was found at the median of the BBs. We also have two Demark based buy signals on the chart. The last time such signals showed up were in July of 2010 and the SPY moved up over 30%, although I'm not expecting a similar rally.

 Volume at price for the last two days, a lot of selling was done above the close from yesterday.

Volume at price for today. Once again, a lot of the sell side volume came above yesterday's close. I think it's a bit interesting considering this earlier post.... "Was the Speech Leaked?" While we may not be able to answer that conclusively, there have been events in which distribution before a damaging speech which had also been embargoed was clearly evident. So does it happen often? I don't know. Does it happen? Without a doubt, absolutely yes.

Here's the EUR/USD Pair. At the red arrow is the open of FX trade this week, at the green arrow is approximately the time of the FOMC announcement. Of course, the Euro moving down means the Dollar is generally moving up, putting pressure on equities, commodities, PMs, etc. However, I don't see this move as moving down in a parabolic spike, there should be some retracements.

The 10 min 3C chart of FXE (The Euro trust) is interesting, there was quite a strong positive divergence on 6-15 through 6-16 and then a negative divergence around the time I started calling for a pullback yesterday, and then a sharp negative divergence like the market right before Bernake's speech today (in the red box). Taken with this article,  that's a lot of assets showing the same correlation as far as 3C goes right before the speech.

Right now the idea is a pullback in to some accumulation with a bounce carrying us up to the daily 50-day moving average around $132, where we'd likely have excellent positioning for short sales to begin the next leg down, which should be more dramatic then the last leg down being QE2 will have ended.

Domestic Mutual Funds are seeing huge deleveraging/redemptions, it would actually benefit them to be able to sell in to some strength on a market bounce. In any case, liquidity is draining from the market and as I've been noting for the last few months, deleveraging is under way as investors and funds used near record leverage to ride the market up over the last 2+ years, those positions, some of which are quite large, are now being unwound-again, deleveraging in to a rally is most beneficial for institutional money.

My thoughts are we will see the pullback that actually has already started, hopefully if 3C is on track and I'm interpreting what I'm seeing correctly, we should see some strong accumulation in to the pullback, giving us a heads up to go long certain leveraged Bull ETFs