Not surprisingly, Technology indices suffered a break of the August swing low, and cut through the 200-day MA too. However, given the loss in the semiconductor index I was surprised not to see more damage here. Selling volume did soar in confirmed distribution.
The S&P didn't escape the selling, although the loss of just over 1% wasn't too damaging. The index finished the day on its 200-day MA, a support level for bulls to work on Monday.
The Russell 2000 put some distance on the break of 1,090 support. A move back to 1,090 will off an entry opportunity for shorts with stops on a move above 1,100.
As a final mention, losses in Nasdaq breadth accelerated. The Percentage of Nasdaq Stocks above the 50-day MA has dropped into the teens at just 16%. It has crossed below levels typical of a bounce; so a bounce likely isn't far away.
The Nasdaq Summation Index is very close to a strong bounce zone (below -800), although a cross of the 3- and 5-day EMA would be a better confirmation marker for a swing low.
Monday is positioned for a bounce, but it will take more than one day of gain to confirm a low. Aggressive longs may best wait for the first hour of action to see if a low is on the cards, or if the selling still has legs.
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. You can read what others are saying about Zignals on Investimonials.com.
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