A weak start to the week, but this is not important
We don't want to dwell too much on today's action, although at the same time, we don't want the selling to get away from us. Sellers were able to push markets lower on light volume.
The Nasdaq drifted back to support, but was able to hold the prior support level (at least, support before the 'black' candlestick appeared). There was a 'sell' trigger in On-Balance-Volume but there is a large degree of whipsaw in this indicator since the swing low in November. There is a modest uptick in relative outperformance against the S&P which may help the index build out from its November bottom, but this nascent trend needs to continue.
The S&P undercut its 200-day MA but hasn't yet challenged rising support defined by the swing lows from October and November. Despite today's selling, there wasn't any technical change. Consider this status quo for the index.
Speaking of Large Cap indices. The Dow Industrials Average returned below its breakout level (defined by the August High) but only has a weak 'sell' sell signal in the MACD to consider. Today's selling ranked as dsitribution but if the index can shape a 'handle' it will offer a solid bullish setup for 2023.
If there is a smidgen of concern it's the Russell 2000 ($IWM). Today's action could be seen as a 'breakdown' or it could be seen as a successful defense of support (marked by the swing lows from the October low) - although if it's the latter, then there can't be another day of losses (or at least one where the end-of-day close respects rising support). Today's selling as ranked as distribution and the bearish 'inverse' hammer from early November remains influential. For the day-to-day action, we won't want to see a close below rising support, although intraday violations are okay.
While today's start isn't great for bulls, there is a still a good chance we could see these losses reversed by Friday's close of business. The Russell 2000 ($IWM) is looking most vulnerable for the day-to-day movers-and-shakers, but let's see what the rest of the week brings.
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