It was 2001 all over again as lead indices registered 3% losses on a day of solid selling and registered distribution. The 'bear flags' are history but their effects are still very much in effect. Worst affected was the Semiconductor Index as it gave up nearly 7% in a move which has the makings of a measured move lower.  The initial target is 1,115 which doesn't look entirely unreasonable after today. There was nothing bullish as relative performance (vs the Nasdaq 100) accelerated lower.

There was no acceleration in the losses for the Russel 2000 and Semiconductor Index but today it was the turn of the S&P to break from its 'bear flag'. It was more of a technical break than an absolute loss but given net technical weakness, it must be respected.

There was no reversal on the 'bear flags' but in the case of the Semiconductor Index and Russell 2000 there were breakdowns from those same 'bear flags'. The Russell 2000 broke the 'bear flag' as the ROC dropped below zero to push it into 'Bear Market' territory. This is not good news for the broader indices as Small Caps leadership is a key requirement for secular rallies - and likewise for secular declines.

Since the last update indices got their bounce but the last couple of days have seen these gains gradually erased. Over the course of the week, the entire bounce has the look 'bear flags' as part of larger measured moves lower.  Should this emerge then indices will be close to offering the long term 'buy' signals I track in the tables below every blog post I make (available on markets.fallondpicks.com for syndicated content). Last of which for all three indices was February 2016 For the S&P, the measured move target is 2,585. This comes on a day of higher volume distribution with an acceleration of On-Balance-Volume lower and other technicals net bearish. However, relative performance is accelerating higher (vs Small Caps) and the index is clinging on to its 200-day MA