Like early action last week, early action this week has consisted of more buoyant price movement, most notably on Tuesday.
That session brought a sizable bounce across the board, making it very clear that a larger near-term recovery is still possible.
This action prompts us to take a closer look at the near-term action to fully understand the path this move could take from here.
This will be the focus in our article.
On any larger degree, the song remains the same.
The breakdown off January's highs fits as the start of a larger degree decline, because that's the only sensible way for this weakness to fit into the larger degree pattern.
All of this tells us to expect weakness to continue in the weeks and months ahead as the big 10-month advance off the March 2009 lows is corrected.
As we'll find in our near-term analysis, the big trick will be determining the path the decline will ultimately take, because as you know, corrective moves can take on a number of different forms.
However, this variability in possible near-term labelings should not detract from the bigger picture, which indicates that the dominant trend is now down.
Action off January's highs started with a bang, courtesy of sharp and impulsive downside movement.
Since the start of February, however, things have become less direct.
The first part of last week was spent in a recovery.
The same has occurred this week.
This up-down-up action allows for some different interpretations of how price will go about its business from here.
While we can spend a lot of time discussing this and that near-term possibility, it all boils down to the one thing.
As long as price stays below our key upside levels at 10400 Dow, 1110 SPX, and 1830 NDX, lower levels must be expected since the larger degrees call for a much bigger decline, and since the near-term pattern still consists of internally impulsive price action.
So as long as these key levels are not breached, a bearish stance is to be maintained.