Sellers Take Control

It has been a while coming, but sellers finally come out of the woodwork. When you have a series of small gains it's easy to get distracted by a large day of selling. We haven't seen a loss of support, so it's hard to say how damaging today's selling really is. 

The Nasdaq lost nearly 2% but it's still a few percentage points away from its 20-day MA and breakout support. Today's volume was lighter than yesterday's, so today's selling didn't rank as confirmed distribution but still has the potential to scare. The selling reversed the relative recovery to speculative Small Caps.

The S&P wasn't as damaged as the Nasdaq in terms of a percentage loss but did suffer confirmed distribution. Likewise, it's someway from testing breakout support or its 20-day MA, but there is a good chance we could see it happening here.

The Russell 2000 experienced similar selling to the S&P with a 0.7% loss. Today's selling ranks as bearish cloud cover with the confirmed distribution. However, the current pace of the narrow rally hasn't been broken with technicals still net bullish. 

Going forward, we need to see what happens at the 20-day MA, then breakout support. Sellers have an easy task until we see the level of demand at a key support level - something we are not seeing yet.