Yesterday the market gapped down and traded immediately lower to test the low the prior day and held right on the support line that we had on the chart yesterday at “2”. The market went sideways for the whole day in a fairly erratic manner. It made a new high that set the high for the day at 11.15, which only brought an immediate fall to the low of the day. The market broke down right at the 3.00 reversal time and fell for the last hour of the day leaving a solid red bar on the daily chart. The SPY was similar. The bottom line is that the market has to be considered in a sideways trading range right now on the daily chart. On the bottom is the support area at “4”, and on the top are those two prior daily highs. Now in the middle of that trading range the daily chart shows a red bar. This sets a threshold of bullishness. If prices are able to climb back above yesterday’s red bar, then there are strong odds that the daily chart will see a retest of prior highs and a likely continuation of its stage II. Until that happens however the presumption is that the red bar will remain. If this causes a retest of the support at “4” it is questionable if that support area would still hold.