Beginning of Bearish Market? or just short-term correction?

We had first week of clear decline since beginning of September. It was not a strong decline and this decline did not generated any panic (we did not see any strong volume surges to the price decline). However, this decline has pushed many technical indicators closer to the bearish sentiment on the longer-term charts (1 bar = 1 day and higher time-frames).

Smaller time-frame charts, on other hand, have some bullish signals. Such, on 15-min and 30-min charts I may see money flow trending toward positive area. Yet, these time-frame are short-term and they cannot generate signals beyond tomorrow opening. From these charts I may say that there is some odds that we may see positive trading tomorrow. Big bearish volume surges on the Nasdaq 100 on November 11-12, 2010 may point to possibility of bounce up as well. Again, the Nasdaq 100 index was the only index that has strong bearish volume during the last two trading session. Therefore I would not rely strongly on the Nasdaq 100, right now.

As I already mentioned, 1-day and longer-term charts are moving toward negative sentiment. Hourly charts are bearish. This is another reason, why positive signals on the intraday charts should not be considered as strong signals.

Tomorrow, I'll be watching 15-min, 30-min and hourly charts. If the indexes follow the signals on the 15-min and 30-min charts and we see up-move then I would be watching hot it may affect money flow on hourly charts. I think US Dollar index it worth paying attention as well. If it goes up and breaks October 19 and 27 highs then it could generate another wave of selling on the stock market.

Keep in mind that over past week we see some increase in volatility. If we see further increase in volatility it may mean that the current movement down could grown into a strong correction.