Reversal or distribution?

Yesterday
Another strong reversal day that continues to put pressure on the bulls.

"907-908 = combined with the 910-912 this range has been an important turning point and a range to allow distribution to take place. So watch this range very carefully to be able to differentiate between distribution and or buying/selling for a new range."

"Bears on the other hand continue to manage new buyers and do not allow them to break our previous upper ranges above 920"

We traded in this range for the majority of the day and any attempts to break to the upside was quickly reversed by the bears. While we had strong up moves in terms of price from the previous day, just as anticipated the bears took control in the upper ranges and bulls lacked any momentum to try to make their stand.

To take it one step further the key ranges of 902-903 that I had assumed would be protected heavily failed horribly. I had mentioned in the comments that as part of my rules a support point becomes resistance when we have a minimum of a 10 point breach of this level. This occurred yesterday and gave the bears enough buffer to treat the 900 range as resistance now.

Looking at our lower highs we can safely assume that the game plan now is the 880 range, an important point for bulls and bears.

I wanted to quote another comment I made yesterday in regards to support and resistance levels.

"When the market is dealing with a strong resistance point on the upper ranges that it attempts to break we will see consecutive tests at this range with uncontrolled/impulsive sell offs that find support at various ranges but will always lead back to the same upper resistance range. When this occurs the chances of a break of this range are very high.

This is not occurring here, we have quite the opposite. After our first run towards 930 we have been dealing with the same support range at 880 with uncontrolled and impulsive buying moves that stall at various ranges (924, possibly another impulsive move now that may stall anywhere from here to 924). The key is that we have consistently retested the same exact support range of 880 whereas the opposite moves have been to various other ranges - almost uncontrolled (many divergences for volume and other indicators).

So taking this into account, the chances are a lot higher here that the market is setting up for a break of this important support and NOT for a break on the upper ranges. If we were working on a break of the upper ranges we would be seeing similar action as last month when we kept on testing 870-880 with impulsive sell off moves towards various support ranges (never the same).

So in summary - I favor that the market is setting up for a break of the 880 and NOT a break of the 930."

Today
For the bull case to continue a rally is needed before reaching 880. The closer the bulls get to the 880 level the lower the chances are for continuation on the upside. On a close basis we are only 10 points away from this key support so bulls need to step in strong off the open.

The bears have strong momentum on their side now and are setup perfectly for a clean break of the 880 range. If bears fail on this attempt and "chicken out" it will pretty much show defeat giving the bulls the upper hand to take this market wherever they want to.

Support and Resistance

907 = key range at our consolidation zone that should hold as resistance

898-902 = a bit wider of a range here but we have to account for some buffer at the 900 level. A break of 902 will bring us back into the consolidation zone.

880 = of course - nothing to be said here

869 = first stop after a break of 880 that should provide some weak support on the intra day

856 = quite a strong support level that should not be broken on the first attempt. From here I am looking for a retracement back to our key range of 880.