Update at 3:50 pm

Here is a five minute bar chart of the e-minis showing the past two day sessions of trading.

The first thing that strikes me about this chart is the relatively high volume, downside breakout early this morning. After such action one expects the market to consolidate briefly and then continue down later in the day. But today this didn't happen. Instead we saw 6 hours of trading sideways in a narrow range and even one high volume upside bar late in the day. This tells me that the sellers are having a hard time mustering their bearish forces despite the help of relentlessly bad news in the media.

I think that what a market fails to do often conveys more information than what it does do. In this case the fact that there was no immediate follow through to the early downside breakout makes it even more likely that this move below the 800 level will turn out to be a brief shakeout which will probably end in the 760-70 range this week. The shakeout should be followed by a high volume rally that should carry the market well above 900.