It was always going to be a tough sell given the speed at which markets pushed down into a retest of June lows last week, but I would have thought a bounce would have lasted longer than a day.
The Nasdaq hasn't violated the June low yet but with Friday's end-of-week print likely to see additional pressure into the overweekend-hold price, it's not looking great for tomorrow.
After Friday's close I would have expected some form of bounce - either today or yesterday - but this didn't happen. On the (somewhat) plus side, there was no undercut of support of June lows for our monitored indices, although the Dow Jones Industrial Average did undercut such support last Friday and it didn't get much better day with another standard bearish candlestick today.
Friday's finish resulted in a nasty weekly candlestick, but a more bullish 'hammer' daily candlestick across the three lead indices I follow. Given that, I would look for some reaction from bulls, but by the end of week it could be bears again calling the shots. Markets are in a retest of the June swing low, but breadth metrics are not as oversold - the Nasdaq Summation Index in particular.
There was no doubt as to where control lies in the market after today's finish. The second reversal opportunity which was playing at the 61.8% retracement of the June-August rally has failed, and with today's volume, ranked as confirmed distribution. It was the same for the Nasdaq, S&P and Russell 2000.
We will start with the Russell 2000. It had the most support to work off, but it has cleanly cut through the Fib retracement zone. It still has the relative performance advantage over the Nasdaq and S&P, but today's candlestick suggests there will be further losses tomorrow. There is some support around $170, which is the next target before the June low comes into range.
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