Daily Market Commentary: Selling Continues, S&P Down at 50-Day MA, Russell 2000 Fails To Hold 20-Day MA

Just a quick update as I didn't do a post after the market close yesterday.  Selling continued to drive markets lower, confirming a large negative divergence in Nasdaq breadth (Percentage of Nasdaq Stocks above 50-day MA) with increasing technical weakness.

The S&P didn't escape the wrath of sellers, but does at least have a combination of 50-day MA and former channel support to lean on.  If there is a buying opportunity for a bounce, then the S&P (SPY) is the place to look.

The Russell 2000 fared less well. It was unable to hold its 20-day MA as support and is caught in a price void with next support down at horizontal support and 50-day MA at 954.

For Thursday, look for bounce opportunities in the S&P.  It has the easiest risk:reward calculation (break of channel support, target upper channel). There is also likely to be demand around 1,600 too.  Other indices may rally too, but it's harder to identify where solid support may lie (and resistance is more prevalent).

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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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