Selling Pressure Keeps Bulls At Bay

Monday's selling in itself wasn't too damaging, but Tuesday and today's action managed to suppress attempts by buyers to claw back those losses.  With indices finishing near Monday's lows I would now be of the opinion we are going to see further losses. 

The biggest worry is the Russell 2000. The bullish handle is still intact, but with today's close right on support I would be looking for this to break tomorrow. On a more positive note, selling volume was light and the index is still managing to outperform both the S&P and Nasdaq. Technicals are approaching a fresh MACD 'sell' trigger.

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Selling Accelerates But Volume Remains Light

There was a pick up to Friday's selling, but while the one-day loss approached 2% for the Nasdaq and S&P it wasn't accompanied with the kind of volume such selling can typically scare up.  The concern is that last week's peak for the Nasdaq morphs into a double top, but for this to be true there would need to be an undercut of the September swing low - and that could take well into November. Until then, we are looking at a sideways consolidation. 

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Markets develop consolidations off their bases.

This week saw markets challenge September's highs, beginning a process of base formation across indices. Volume fell across the week, fitting with a consolidation and not active selling. This action is bullish for indices - only if selling continues on a pick up of volume should one become concerned. 

While Nasdaq selling volume fell over the course of the week, but with four consecutive days of selling the index is close to a 'sell' trigger in On-Balance-Volume. The index is still underperforming relative to the Russell 2000. 

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Indices Test September Highs

We started to see a little easing as indices approach September highs. Ideally, we would like to see some sideways action or 'handle' to consolidate gains from the reactive rally off September lows, so if things go quiet here I wouldn't be too concerned.  

For the Nasdaq, selling volume eased in contrast to yesterday's higher volume accumulation. Technicals are all net positive, including an uptick in relative performance against Small Caps.  Tech stocks are looking to regain their mojo, which is good news for Tech stock holders looking for new all-time highs.

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