It’s not strong selling, but it’s still selling. The S&P now finds itself back at breakout support as other indices drift further away from all-time highs. This is an important test, because if the S&P was to lose breakout support it would open up for a “bull trap”. After that, things could start to get away for the Russell 2000 and Nasdaq.The S&P holds to bullish net technicals with a return to relative outperformance over peer indices.
The Nasdaq has drifted back to the breakout gap, also in close proximity to the 50-day MA. I’m not sure there is enough between today and yesterday’s spike lows to suggest a “tweezer” bottom; a reliable reversal pattern. Watch up for an open above today’s close to set up a day-long rally.
The Russell 2000 (IWM) has tagged its 20-day MA and has started to weaken technically. There was a ‘sell’ trigger in the MACD with the trend measure, ADX, also close to a new ‘sell’ trigger. While the earlier attempt to challenge highs has faded, the index is still range bound and therefore, trendless. This means the chance of further selling is perhaps just as likely as buying.
For tomorrow, the S&P is the index to watch. It will be important for breakout support to hold, although an intraday violation of this support level is acceptable. As for the Nasdaq and Russell 2000 ($IWM), it could go either way.More By This Author:S&P Holds Breakout To Help Russell 2000
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