Poor action in the bond market, as it is wont to do, eventually spilled over and took its toll on equities. The bulls were doing a good job of holding on to yesterday's gains, but they couldn't generate any upside, and bonds and the weak dollar provided an excuse to lock in some recent gains.
The good news is that the indices are still above key support, but volume increased and breadth was poor. Still, the market isn't in that bad of shape here, but there are definitely some things to worry about. Bonds are very troubling. The last thing we need at this point in the economic "recovery" are higher long-term interest rates, but the bonds are not cooperating.
Technically we are still OK, but momentum has been slowing for three weeks now. While we haven't rolled over and cracked, there has definitely been an increase in the aggressiveness of selling into strength. There is still underlying support, but when upside follow-through is limited, the buyers will be less aggressive with each successive dip.
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