I guess our days of being bullish have been short lived. Although there were bullish signs for the DJIA to push itself to higher levels, it just didn't seem like it was possible as there were some things missing.
The first thing that was missing was the pick up in volume as the index was moving higher. This alone made the rise suspect. Even the breakout from the supposed inverted head and shoulders formation was dubious as there was no pick up in volume on the breakout. Some called this the Goldman Sachs rally. But that's another story altogether.
As seen on the chart, the uptrend support since March 2009 has already been broken a few days ago by the DJIA. Not only did it break through the support, it also broke the 50-day moving average at 10450 and is now currently being supported by the 100-day moving average at 10116. If I were to follow where the DJIA could go to, the index could possibly fall to 9337. By that time, even the 200-day moving average would be broken and things will definitely turn bearish.
However, I think that this has been the correction that many people have long been looking for so that we may now proceed to the next wave of the bull run. In short, we need this correction to go higher. So we should expect the MACD to really look bad when this happens. We shouldn't panic over it. But that's not to say that we won't do anything while this is happening. Lighten your positions. If possible, stay liquid until things turn around.
It's time to stay on the sidelines.