Despite a .82% drop in the Dollar Index, the major U.S. indices could not hold on to gains on Monday. That’s not good news for the bulls. The small caps are fully overbought and over extended … and Biotech has started to correct, as predicted yesterday.

This is an area in the S&P and Dow where sellers have dominated in the past and I expect some profit taking here. Consequently, look for tests of 4412 and possibly 4383 in the Nasdaq futures before Wednesday.

A Note on Volume Profile

The histogram on the left side of the chart shows the volume distribution in the S&P futures for different periods of time. Key support and resistance levels are indicated by the peaks and troughs.

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