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Labored would best describe the progress for US indices at present as they continue to cling to the longer-term bullish trend, but increasingly with less belief with narrow spreads, weak rallies, and short-term reversals the order of the day. From a volume perspective, this is all seen as rallies on falling volume and falls accompanied by rising volume, with Doji candles punctuating the stuttering performance. This aspect of price behavior is also one that is mirrored in the yen complex as the primary risk pairs struggle to break free of longer-term ranges and find any degree of positive momentum

The daily chart for the ES Emini is one example, but we could take the NQ Emini or YM, all paint a similar picture and here we are considering the ES daily chart. Note the recent move lower on the rising volume of last week with Friday’s candle confirming with the effort to raise duly capped off and closing with a solid red body and deep upper wick. The start of the week saw little improvement in longer-term sentiment with extreme volume associated with the Doji candle, hardly a sign of great strength and reinforcing the current picture which is fragile at best in terms of risk-on sentiment as the index clings to gains made over the summer months. The question is whether we are reaching a major top and the technical picture is certainly shaping up this way as risk appetite drains away. However, what I believe we will see before this takes hold are some further strong reactions lower, followed by weak recoveries which will then be the pre-cursor to a distribution top and the climactic action of a major reversal.