While the S&P took another, smaller, step lower. Both the Nasdaq and Russell 2000 seem to have stabilized around last week's trading range. Today's volume was lighter than Friday but remained very heavy overall. Traders willing to use the current low as a risk measure may find enough room for a relief-rally trade, but it won't be one for the feint of heart, and could easily be stopped out tomorrow. In the case of the Russell 2000 ETF, $IWM, the trade stop is below $95.69, but with an ATR of 7.84 you would ideally be looking at a stop closer to $83s to allow for volatility - making the typical risk:reward worthless. So, with that caveat, buyers want to be close to the exit button.

Wednesday had offered the opportunity for the start of a swing low following a 'bullish' hammer in the S&P, but there were more indecisive candlesticks in the Nasdaq and Russell 2000, and with Friday's selling coming on the back of higher volume - although this coincided with a Triple witch for options expiration - undermined any possible demand mid-week action could have hinted at. Markets are again in a situation seeking a low, and with key indices finishing near the week's lows (likely awaiting news over the weekend), the chance for yet another gap down tomorrow looks high.  What will be important will be the selling volume - we want to see some exhaustion (light volume) on down days, followed by higher volume buying on days markets are able to close higher. The S&P looks like it will gap down tomorrow; failed 'bullish hammer's have a nasty habit of trying to seek new lows. The only thing 'to like' here is the relative underperformance aga

We are still in a hunt for a low but there is evidence that markets are finding some consolidation around recent price action - even if the range from high to low for this range is around 10%. The S&P finished with a bullish hammer on Wednesday on a high volume day, today was more of an indecisive 'spinning top' on lighter volume. The S&P is trading 20% below its 200-day MA but a bounce is needed; however, nobody knows when this bounce will emerge. Technicals are not offering much guidance yet.

Markets continued their downward leg in an attempt to an establish a low. For example, the Russell 2000 has already given up 35% from its highs and today's candlestick didn't suggest a capitulation (it looked better on Friday). For many of the indices there are no developing divergences to work with and there hasn't been any semblance of a bounce to establish a sideways consolidation of losses, so we are still looking for a swing low to work off. The S&P did register as an accumulation day and managed a reversal of yesterday's losses, but aside of that there wasn't much more to say.  The S&P has comfortably surpassed the 5% zone of historic weak action, but to hit the 1% zone would require a tag of 2,223.