Here is my updated hourly chart of the cash SPX, which shows (1) the initial downleg from 1326.70 to 1245.34; (2) a recovery rally to last Friday's high at 1290.68; and (3) the resumption of weakness that so far has pressed to 1254.46 yest. Are we to believe that yesterday's low represented a successful retest of the May 24 low, and that a new powerful upleg is starting?  Or should we believe that the dominant near-term trend is still alive and well, and that current strength is a minor relief rally prior to another bout of selling pressure that revisits the May 24 low? Right now, my work argues in favor of the latter scenario.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.