Sellers Rewarded

Sellers took control right from the start today, driving price to the lowest levels seen in the last couple of weeks.  I doubt we're done testing prices above, but buyers were scarce today.

Note that the VIX finally broke from its recent range today, which portends the probability of additional testing of support in the near future...

Dollar Danger!

We're been watching the USD's action at this long term support level.  Today, the USD has finally broken down.  First chart is an intermediate term view, and the UUP chart is a longer view (5+ years).

Also, check out the relentless bull market in gold.  Can there be any doubt about the world's perception concerning the solvency of the US?

Distribution

Gapping higher and then selling off is evidence of distribution.  The market is more easily manipulated during the overnight session because it's so thinly traded.  Higher prices enable large players to sell slowly at more favorable prices...especially if accompanied by good news (i.e., the recent unemployment numbers) which draws in retail buyers that the large players can unload their shares to.

Testing the Top

Sellers weren't able to gain traction from yesterday's sharp selloff, which means the rally lives on.  Overnight action has price testing recent highs, but new highs are likely.  Limit orders pending at 1338.25 and 1339.25.
Note the shape of price action over the last couple of weeks as we test resistance levels established in February.  Long term tops often appear rounded as the battle between buyers and sellers causes an increase in activity but with little directional movement.
For now, price remains above the key 1320 level...but once it has tested slightly higher I suspect we'll soon be looking at 1305 again...