Having spent the weekend away I missed the initial breakdown but today was a clear rebuttal of the 2018 rally. The past two days have undone all of the gains of this year - undercutting slower channel support for many of the indices. The S&P climbed to register as distribution with a net bearish turn in technicals. Next downward target is the 200-day MA around 2,530.

So far, the sell off has been relatively orderly with a mix of accumulation and distribution. Barring initial breakdowns from acute channels there hasn't been any acceleration in the downward moves. The first index to offer itself as a bounce opportunity is the Russell 2000.  Today's slightly higher close left the index bang on wedge support anchored by the November and January 'bear traps'. Technicals are weak but aside from the relative performance there hasn't yet been a net bearish shift so there is still a chance buyers could step in and attract fresh buying.

Two days of selling has finally put a stop to the accelerated gains from December but it should also provide an opportunity to shake the weak hands out of their positions and set up a more sustainable rally. The nascent breakout in the Dow has been undone by the fall back inside the prior channel, leaving in its wake a 'bull trap'. Shorts will use the 'bull trap' highs as a place for stops.  Typically, 'bull traps' from channel breakouts go all the way and drop out the other side - this would be a secondary shorting opportunity but we are not there yet.

Another firm round of gains across all markets kept things buoyant. The Dow managed a fresh breakout from channel resistance on higher volume accumulation.  This has the look of yet another channel acceleration as the chance for a parabolic blowout increases.