Mini-Correction in March Bounce
It has taken a while, but we are finally seeing the correction in the rally which was started by the (surprising) rally following the February low test. It looks like a buyers pullback, but there may yet be further losses before we see this move done.
The index most impacted by today's selling was the Russell 2000 as it lost its base-building breakout, and prices were returned into its earlier base. Selling volume was relatively light (compared to January), but today's trading qualified as a distribution day. Technicals remain net positive and it will now have the 50-day MA to lean on as support.
The Nasdaq didn't escape the selling, but more importantly, it didn't undercut last Friday's low as happened in the Russell 2000. The Nasdaq didn't lose relative ground against the Russell 2000, but it did a little to the S&P. Technicals are net positive and there is a good chance any additional loss will see support kick in on the bullish cross between the 20-day and 50-day MA.
The S&P also managed to hold Friday's low, but it did lose breakout support from the February double top. Because of its prior strength, it had managed to break past its 200-day MA, which is available to it as support now that sellers have taken control. Failing that, there is the 20-day/50-day MA to come next. As with other indices, technicals are net positive so it still has bulls on its side.
You've now read my opinion, next read Douglas' blog.
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