Market Review

Bears had a field day as they pushed the Bulls around with relative ease, taking down what modicum of strength buyers tried to muster from the open. Volume again eased in a trend which suggests selling enthusiasm is on the wane, even if the headlines suggest otherwise.

Nasdaq internals still haven't hit the levels seen in August (although August lows did reach deep oversold levels) so the inkling here favors more downside. If the Summation index:


and percentage of stocks above the 50-day MA


can rise above their 5-day EMAs with supporting technical 'buys' for the likes of the MACD (in particular), then there is the potential for a strong bullish divergence which would set up a 'Santa' rally.

Long term bears will look to August lows as the line in the sand for the start of the next cyclical bear market. For the semiconductors it looks like the cyclical bear is off and running:


While small caps are perhaps the first of the lead indices to worry about such support:


With large caps not much behind. The failed test of the 200-day MA for the S&P is looking more glaring now:


Tough times ahead.

Fallond