Here is the daily bar chart of the March '12 e-minis which I have been tracking in recent posts. As you can see the up trends from both the October 2011 low and the November 2011 low are still intact. The top of the second blue dash rectangle is around the 1370 level. It marks the spot where the rally from the late November low would equal the size of the October 2011 rally (first blue rectangle).
Notice too that the upper channel line of the green dash trend channel currently sits just above the market around that same 1370 level. For these reasons I think there is strong resistance just above the market in the area delineating by the green oval.
As you can see the entire advance since the December 19 low has been essentially uncorrected and has carried the market up about 14% during the past two months. Yesterday's break has been mostly retraced today, continuing this pattern. But I think things are about to change.
The market is preparing to drop back toward the green trend line. In the process I think the upcoming correction will be similar in size to the December break which carried the S&P down about 70 points. Support should be found in the purple oval.
I still think this is a bull market, normal corrections aside. The fact that the Dow industrials, the Nasdaq composite, and the QQQ's have all traded above their May 2011 highs just underlines this fact. But sentiment has grown quite bullish and a broad range of stocks has been trading essentially sideways for the past 10 days. This trading range has been hidden by the spectacular advance in Apple stock (AAPL). But the break yesterday in AAPL is I think a harbinger of things to come. An important prop has been knocked from beneath the market. A drop which will correct the December-February advance lies dead ahead.