The Nasdaq did lose the tightly ascending support line established from the April swing low. A move to the 20-day MA looks most likely.
Supporting a call for a swing high in the Nasdaq, is the swing reversal in the Percentage of Nasdaq Stocks Above the 50-day MA.
Plus the heavier than expected selling in the semiconductor index; a key leadership index for bullish rallies. There was also a relative shift away from semiconductors to Nasdaq 100 stocks at large. The semiconductor index is likely to see a 20-day MA test on Thursday.
Something the also hard hid Russell 2000 is a few days away from doing.
Not surprisingly, the more defensive Large Cap S&P took the least damage, but did register a distribution day.
Today was the first confirmed sign of a possible top. The higher volume selling was the obvious clue, but the milder damage to the S&P relative to the Nasdaq and Russell 2000 suggests the appetite for speculative stocks is dropping fast. Without money flow in the latter indices, the prognosis for the rally lasting much longer turns negative. Profit taking likely on any strength in the morning...
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.
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