Quick Run Down: The market closed up just barely after starting the day weak. The bulls regained control at SPY's support at 128.54 our key support was 128.44.  The market rallied till hitting the morning resistance at 129.51, our R1 level was 129.65.  The selling pressure is noticeable at this level and it comes from a combination of a horizontal resistance and the long-term downtrend(the pinkish line). 

Gap and Move: The theme of this market seems to be gap and consolidate for a few days and then gap again.  This what we are seeing now, after gaping up on Monday the market is chopping around not making any moves.  But this time the market might not gap up, instead it is more likely we will see a decline.

Heading Lower: The market is very overbought here based our the Piker Indicator.  Check here for that chart.  Second the market is sitting on its short-term uptrend(blue line) and the downtrend line (pinkish), one of these will break sending the market in that direction.  But the longer-term trend has to take priority over the short-term trend- so a move lower would come from the failure to get above this trend as the selling pushes it lower. 

Where too?:Realistic SPY is looking to head back down toward the 126-125 level testing the breakout level from the beginning of the year the the intermediate term uptrend.   

Look at the Q's: The QQQ ETF is in a similar situation as SPY, it is nearing its downtrend and long-term heavy resistance.  QQQ has a lot more resistance above from 58.60-59.30.  Since early 2011 QQQ could not get above this level, as it nears it again it appears it might not have enough this time.  The most likely move would be for QQQ to fill the gap at 56.42.

Read more http://www.pikertrader.com/main-page/2012/1/12/spy-and-qqq-end-of-the-day-review.html