Where the S&P was knocking on the door of a break of 2085, it instead finished the day below its 200-day MA. It has been a long time since it last trades below this average, but we may be now looking at the start of the capitulation. While losses were big, it maintained its relative strength against the Russell 2000.
The Nasdaq suffered significant losses, but remains some distance from its 200-day MA. Despite this, the index has fallen into a period of relative under-performance against the S&P. Further losses look favoured.
With the Semiconductor Index is close to panic mode as global demand for technology / business upgrades heads south. It's struggling to hold on to the February low. The May breakout of 734 is feeling like a long time ago.
Small Caps has dropped back to trendline support, but has it enough to give bulls something to work with? It would be a brave buyer to take a punt here. The 200-day MA at 1,204 may offer more joy.
Sentiment has been mapping bearish divergences since 2014 (2013 for the Percentage of Nasdaq Stocks above the 200-day MA), but none of the key metrics are oversold to suggest a bottom is near.
Tomorrow is open for bears, or at least likely to keep bulls away. Further losses on the cards?
You've now read my opinion, next read Douglas' and Jani's.
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I do a weekly broadcast on Friday's at 13:30 GMT for Tradercast, covering indices, FX and gold, silver and oil - all are welcome! You can read what others are saying about Zignals on Investimonials.com.
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