Additionally, fund-flow reports show that there are no real inflows into mutual funds so far in January. This is rare. At the same time, pundits acknowledge that judging by the strong December performance, the January effect could have been crammed into December.

Regardless of the fundamental side of things, as we showed yesterday, the S&P 500 quickly found resistance at 1197/1200. Yesterday we showed a chart of a short-term inverse Head and Shoulders pattern that projected to 1195. The index closed at 1195. The S&P closed on its high tick Tuesday at 1196 and never ticked higher on Wednesday. Yesterday we stated that follow-through would be the key and not to chase the market until follow-through showed up.

Since the beginning of the year, stocks have not been able to cobble together more than two consecutive days of gains: The near-term trend is down. Moreover, the weekly chart on the S&P turned up on Tuesday and immediately found resistance and slid back. That's a bearish sign. Additionally, the S&P failed near 50% of this year's range, which is 1197.75. Additionally, the S&P closed below 50% of Tuesday's Real Accumulation Day. Tuesday's range is 1188. The index closed at 1184.65 on Wednesday.

Conclusion: Offsetting Tuesday's Real Accumulation Day (RAD) -- especially on a closing basis -- and closing below the key 1183/1184 pivot (based on the Gann Square of Nine Chart) would be a sign of lower prices.

(In the chart below, Jan. 4 and Jan. 13 were Real Distribution Days (RDDs) on the S&P 500. Tuesday was a Real Accumulation Day. However, the index has slipped right back below the high of the low-bar day, which was 1187.65 on Jan. 13, and in the process has closed yet again below its 50-day moving average.)

S&P 500 Daily Real Accumulation and Real Distribution Days

Nasdaq Composite