Further Selling, But More Likely

The S&P took another beating as it undercut its 50-day MA. The day finished with confirmed distribution without any clear late day surge by bulls. Tomorrow could offer more of the same, although there is the benefit of Fib retracements on which buyers can lean on.

The Nasdaq finished on breakout support. However, today's candlestick finished with a bearish engulfing pattern (weakened, because traditionally it's only viewed as bearish when overbought).

The one index which I thought could hang on was the Russell 2000. It broke below range support, and its 200-day MA, leaving Fib retracements as the next support levels to work with.

The Semiconductor Index is fast approaching breakout support. The rate of advance is looking a little quick for it to be a bullish retracement, so look for the next bounce to be sold.

Tuesday is another opportunity for buyers to make a stance. I would be looking for an afternoon buying surge, but keep any eye on Fib levels - at which tomorrow's open will offer Fib level support for the S&P and Russell 2000.

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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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