The Nasdaq 100 is on the fiftth day of selling in a row. The August swing low wasn't fully tested. Bulls will be looking for a bullish 'morning star' where today's candlestick 'hammer' is followed by an opening gap, then a rally for the rest of the day. Should this emerge, then a move to test 4,300 is next. If there is a weak open, then any chance for a bullish 'hammer' based on today's action is significantly weakened.
Losses in the S&P, while comparable to the Tech indices, didn't see a loss of January's lows. Today's spike low did fall inside the range of January's spike low. This will offer grounds for a positive response tomorrow; today's lows will likely see a cluster of stops.
The Russell 2000 has been leading the move down, although the past few days have seen a positive relative response (against Tech averages). However, today's low marked a new low for the year. Additional losses has the potential to pull other indices down with it given this leadership role.
Tomorrow's action will be heavily influenced by pre-market action. If there is a gap down, then whatever confidence built by bulls today will quickly dissipate. A gap higher, and there will be a scramble between value buyers and short covers.
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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