Dow Jones - 10-minute chart:
As I write this, a reversal has taken the Dow back below that downtrend. Tech stocks are trading in a similar fashion, with the NADAQ showing an intraday range of only 13 points. The Composite has also traced a series of lower highs since it topped out on Tuesday morning. Weakness in the semiconductor index (SOX.X, -1.2%) seems to be keeping a lid on any major intraday advances.
Bulls will argue that the indexes are simply catching their breath before making another breakout attempt. However, recent developments in the currency market urge a cautionary stance. Following a short-lived relief rally that took hold just before the war in Iraq kicked off, the U.S. Dollar index has reverted to the steady downtrend that characterized the December/January movement.
Annotated daily chart - U.S. Dollar index:
This weakness in the Dollar provides ammunition to bears who make the case that the past several weeks of market gains haven't been back up by any real fundamental improvement. The falling Greenback indicates that foreign investors are showing a lack of confidence in the U.S economy. Factor in a VIX.X that's been drifting towards 20.00 (which is historically the lower end of the indicator's trading range), and you've got a trading climate that might promote a bearish reversal - at least in the near-term. Of course, another wave of short-covering wouldn't be out of the question if the averages muster a breakout to new relative highs.