Some pent-up buying built over the weekend couldn't be sustained over the course of today and instead markets finished near their lows. It was a disappointing finish to the day and a poor start for the week after a positive Friday set up.
The Nasdaq gapped higher and did at least hold on to its gap by the close. However, it wasn't enough to stop a 'sell' in the MACD trigger.
The S&P finished with a bearish engulfing pattern, although volume was lighter - so no distribution, which takes some of the sting out of the selling. The index had already registered 'sell' triggers for the MACD and On-Balance-Volume, but there was an acceleration in the relative underperformance of this index to the Russell 2000.
The Russell 2000 finished with a bearish black candlestick at a rally peak. It's still holding support but it's looking vulnerable after today. Technicals are net bullish, but the MACD is close to a new 'sell' trigger.
We have gone from an optimistic close from last week to a pessimistic start to this week. Momentum is with bulls, but this has been a powerful rally running since the end of October. A period of sideways action would be welcome in consolidating breakouts, for the Russell 2000 in particular.
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