Sellers in control

Here is a 5 minute bar chart of day session trading in the e-minis yesterday and today.

I was bullishly inclined at the open and followed what appeared to be an increasing volume move above the 840 level. However, sellers soon became aggressive, especially after the consume confidence number was released at 10 am ET. I have highlighted with arrows the highest volume bars since yesterday morning's. All of them were wide range down bars and this pattern is a clue that sellers are now in control of the market. In other words, a supply shock may be underway. If this is the correct reading of the situation then I would not expect any rally to retrace more than half of today's range (purple dotted line is resistance).

The fact that the market has shown a pattern of increasing volume on the downside after a lower top is also another bearish clue.