Daily Market Commentary: Powerful Gaps Down
($SPX)
via StockCharts.com
The Nasdaq gapped powerfully lower, taking it below 2,152 support (the new threshold for a 'bear trap'). Technicals are net negative following the MACD trigger 'sell'. Volume registered as a confirmed distribution day but given the extent of the loss it could have been higher.
($COMPQ)
via StockCharts.com
Small Caps posted a big percentage loss but managed to hold within range of June low support. Technicals turned sour with a break of the CCI bullish divergence and a MACD trigger 'sell'. Given the action in other indices it's up against it to hold support.
($RUT)
via StockCharts.com
The semiconductors cracked below the 200-day MA but have yet to reach May-June support (good news). But like other indices, technicals are net negative with its MACD trigger 'sell' - so it has the same troubles as these indices.
($SOX)
via StockCharts.com
Unfortunately, yesterday's struggles at the 20-day MA manifested itself with a powerful move down. With individual indices losing close to 4% in one day there will either be a sharp countermove higher or things are going to run away from bulls very quickly in a manner similar to 2008.
Markets are currently poised in a position very similar to the start of 2008. The failing point that year was the inability of markets (S&P) to break above their 40-week MAs (200-day MAs) when the next rally emerged. Despite today's sell off I still think this rally has yet to come - but it's hard to see this not heading lower when the traditional weaker part of the year (Sep/Oct) rolls into town.
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