Minutes after I posted yesterday's note about us gapping up over the S&P's 200-day moving average the CPI was released. That report took some of the strength out of the pre-market futures. So the open on the S&P was basically flat. It quickly tested the 200-DMA and fell back for the rest of the day to close at a new low for the year. Even worse, that happened on higher volume than either of the two preceding up days. The Dow also made a new low but the Nasdaq was able to hold above its 2005 low.
Despite the good day for the bears there may be a couple of signs that the sellers may be losing power. The volume was less than Friday's volume and the indices fared better with respect to their lower Bollinger Bands. That latter fact could lead to some W bottom setups with respect to the Bollingers (John Bollinger has a good discussion of those type of bottoms & tops in his book) Personally, I think it's better to have a retest of the recent lows as opposed to making a V bottom -- those always make me nervous...
