Russell 2000 tests May low support
It was a blowout for the Nasdaq and S&P as both indices sliced through the lows of May. It's now left to the Russell 2000 ($IWM) to cling on to support. The latter index lost almost 5% on the day as it gapped below rising trendline support as all technicals returned net bearish. However, relative performance to its peers continued to improve.
There was nowhere to hide for the Nasdaq and S&P as each gapped and ran below May support with consumate ease. There was no wide range day, and no spike low to offer bulls any optimism. However, I would still be looking for a 'hammer' / 'dragonfly doji' candlestick to mark the next attempt at creating a low. We may see this today, it may take a couple of weeks, but we are closer to the end than the beginning of this sell off.
The S&P will grab the headlines, but its loss wasn't the worst for the indices on the day. Technical are again net negative on confirmed distribution. Again, a one-day reversal candlestick is all we need to start establishing a new low.
Yesterday's action looks bleak, but we do need context as to where markets lie on longer term charts. Traders may need to wait for a trade, but investors do not.
You've now read my opinion, next read Douglas' blog.
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