We saw it. Stocks started the day off regaining some ground and we got the bounce I expected. The bad news for bulls is stocks couldn’t close the deal and managed to give up all the gains.

The Dow finished down 0.16%, the NASDAQ down 0.04% and the S&P 500 down 0.10%.

Here’s a daily chart of the S&P 500:

Big reversal today as the Dow gave up some decent gains and ended up with a loss.

From watching the market, I think that the selling volume accompanied with the fall in the last hour of trading was significant. We were trading with volume around 30% below the 50 day average at the highs of the day and managed to finish just under average volume for the day.

The 10 minute chart verifies my observation:

Like usual, volume spiked before close. Unlike the other days, we saw a larger spike and a significant drop associated with it.

This to me signals even more weakness in this market. We are in a correction and may actually get a down-trend to trade.

I still think we will get some more sideways action in the next couple of days before continuing to slide due to the general oversold look of the market.

In trading the market, I would wait for the bounce, and then pick up a short ETF at the first sign of weakness. The good news is I’ll keep you updated on when that moment happens.