Again, the Russell 2000 is leading indices lower. I chickened out of my long play when morning selling quickly filled the gap, but bulls may have a chance Tuesday as follow through selling failed to materialize and buyers were able to stage a comeback by the close of business.
Tech indices also benefited from a bullish hammer. Nasdaq prices hit the 15% percentile of historic oversold prices going back to 1971. It was the last of the indices to reach this zone. It trades close to September lows and may find support then. Of the indices it was the only one to register a distribution day, but given prior selling this may turn out to be more short term bullish.
Watch premarket for leads. Today's closing action suggests buyers may be willing to step in here. The question will be what (if any) damage is done during the Asian session as China continues to dominate the headlines. Shorts will be looking to attack the next rally with vigor, particularly when indices make it back to November/December swing lows.
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 also trade on eToro and can be copied for free.
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