Gaps Down Put Pressure On Bulls

After weeks of gains which amounted to a series of low volume rises, we now find a more concerted action to the downside with gaps which may not get filled easily.

In the case of the Nasdaq, we had the August breakout stall and reverse with a move below breakout support. I have drawn a secondary support line connecting the last swing lows. This can be considered support until proven otherwise. Aggressive buyers may consider a position here, but the spinning top doji is a more neutral candlestick - suggesting price action could go either way.

The S&P experienced a larger gap down which undercut its 50-day MA. Technicals are net bearish with today's cut below Stochastics [39,1].  The next major support level is the 200-day MA. 

The Dow Jones had already broken below support in late August - offering an indication as to what may come for the S&P.  It looks like this index is heading to a test of its 200-day MA. so look for a similar move in the S&P. 

The Russell 2000 also gapped lower, but as its range-bound, the move was of lesser significance.  Add to that, it gaped below its 200-day MA on higher volume distribution, Technicals are mixed with 'buy' triggers for On-Balance-Volume and Stochastics offset by 'sell' triggers in ADX and MACD. Of the lead indices, I wouldn't be too concerned on the gap down for now.

With the Dow Industrials leading the market topping action it would appear the Nasdaq and S&P have some way to go to catch up with it.  The Russell 2000 is of lesser concern as long as the trading range remains.