The potential 'bear traps' quickly stalled and sellers again returned to the fore. Selling in the Nasdaq undercut the lows of the 'bear trap' with a finish on the low of the day. There was also a 'sell' trigger in On-Balance-Volume. The wide intraday bar marks a change in the action since the beginning of this rally in November and today's volume marked a return to distribution,.
We had a successful test of support for the Russell 2000 which delivered a low volume bounce with minimal improvement in supporting technicals.
Indices have gone from new high breakouts, to 20-day MA tests, to breaks of trendline support - weakening at each step along way.
The Nasdaq finished Friday with a loss of the 50-day MA after trendline support gave way on Thursday. Friday's volume was relatively light, but there was confirmed distribution on Thursday's selling. Technicals have taken a marked step lower, especially the MACD - although On-Balance-Volume is hanging on to its 'buy' signal. Intermediate stochastics [39,1] just undercut its mid-line, although a rally tomorrow would be enough to see this as the start of support for a secular trend pullback (although such a pattern would take time).
Looks like Gamestock Part II has put a scare in the market! While this stock starts another wild ride, the broader market took a step back. Today's move carries more weight because it marked the first wide intraday day in a while, and was the first real day of selling experienced since September.
For the Nasdaq, this amounted to a support break and a close below its 50-day MA. Volume selling was lighter, but perhaps shareholders aren't as worried as they probably should be...
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