After two days of consolidating in response to weak economic data, today the market got what it wanted - better than expected economic data.

The markets swift and sustained move higher in reaction to the positive news suggested that the bulls were confidently in charge in the morning. But after lunch the market rolled over on what was most likely profit taking that accelerated as markets returned to the prior day's range.

The U-turn pattern, most prominently displayed by the IWM, is cause for concern for the bulls, especially in the face of good economic data.

S&P 500 (SPY) Closed in the middle of the day's wider than average range. I expect Wednesday's upside to be limited by the day's range, but the downside is not so easy to say that about. There is support at 140.21, and then below the range at 139.49.

Russell 2000 (IWM) The weakest of the four indexes and the reason to be bearish. Its complete round trip which only exceeded the previously mentioned gap resistance level by 4 pennies creates an ominous doji at the 50 DMA. The better than average volume further supports my feeling that an OR breakdown tomorrow should be shorted.

Dow (DIA) A stark contrast to the IWM. It closed at a new multi-year high and that's what the media will focus on. The divergences are blatant and dangerous for the bulls, but if the market moves higher I'll look to be long DIA.

NASDAQ 100 (QQQ) Just as disappointing as the IWM, but a little stronger. It needs a rest and could get weak. Look for resistance at 67.20 and 67.40.

Gold Trust (GLD) The economic report at 10:00 pushed it modestly lower to the FTP where is consolidated all day. This could be enough consolidation to move it nicely in either direction tomorrow.

XLF (Financials) Managed to close over last week's swing high by a penny. All things considered it looks ok.

IBB (Biotechnology) It did not trade over Monday's high. It took a much deserved rest, and may need more time to rest.

SMH (Semiconductors) Now has three days of tight consolidation at the 50 DMA. Don't be surprised by a move in either direction.

XRT (Retail) An wide range today which began and ended at the low of the day just like the IWM.
IYT (Transportation) It closed over the last 3 days of highs and if it continues higher on Wednesday it will be a good breakout of the wedge on the daily chart from the lows in Feb. and the highs in March.

IYR (Real Estate) Moved higher and held up well.

OIH (Oil Services) A strong day the topped out at the 50 and 200 DMA level. Look for support at the 41.80 level.

XLE (Energy) One of the best performing ETF's here. It stopped at the 50 DMA. Expect resistance at 73.

TBT (Ultrashort Lehman 20+ Year Treasuries) Positive economic data moved this higher as you would expect, and it held up. It has a good base to move higher from.

Longs:
Today we did well with the longs. I don't see many great set ups for tomorrow so I'll be cautious on the long side.

On categories: Gap higher days we go to all categories and choose ones with lowest risk that break the opening range. On weaker days, we look at Category 3, especially if the picks hold S1, previous day lows or a major moving average and have a good risk on the reversal. The difference between Category 1 and 2 is the stock condition-a Condition 1 is strongest stock and more likely to make a parabolic move.

Category 1: (Aloha) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:

None today

Category 2: (Pipeline) Positive Phase, Condition 2-3, 2 days under the FTPs, Risk to Previous day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:

None today

Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means candidate for Opening Range Reversal, Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry:

WYNN - breakout or reversal over 133.50
AXP - very strong, I prefer a reversal
DO - Energy has lagged and this and nice consolidation to break out from. Reversal or breakout over Tuesday's low.
ESRX - It had a very strong day and closed on the highs. I rarely runs up 2 days in a row so I'll look for a reversal.
WFC - On Monday I pointed out, "A small ATR of .58, but the weekly chart is positioned for a major breakout for a position swing trade. The first breakout objective is over Friday's high of 34." It cleared 34 yesterday so OR reversal or reversal with a swing trade in mind.

Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 1-4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:

None today

The action in the market watch on Tuesday leaves me feeling like the shorts may have the advantage until we get the employment data on Friday. I don't expect a big market sell-off but selling of strength and select OR breakdowns are easier patterns to find for Wednesday.

I would look for breakdowns or reversals in all of these:
ALTR
ARUN
MPC
BIDU
NOV
CAT
GDI
CMI
AAPL - Still in a bull phase and sitting on the 50 DMA makes this risky but if the market is weak and this breaks is could be a very nice move down