Where there was little to say about Monday's trading, there was much more to today's and yesterday's action. For starters, we saw a significant loss and moving average undercut yesterday, and a continuation of the selling today. The volume also rose in confirmed distribution.

The Russell 2000 gave up two down gap days as it cleanly undercut what was 20-day MA support. Adding to that was a "Death Cross" between 50-day and 200-day MAs - although in reality, we are looking more at a trading range. Adding to the malaise were new 'sell' triggers in the MACD, On-Balance-Volume, and ADX.

The S&P has edged back to support of the last swing high in March but hasn't yet touched on 50-day MA support. The mini-range breakout is still in play, but it has been offset by the 'sell' triggers in On-Balance-Volume, MACD, and ADX as occurred in the Russell 2000. The key lead for bulls is the relative performance advantage of the S&P over peer indices. 

The Nasdaq was interesting in that selling didn't register as distribution, although it had already experienced 'sell' triggers in the MACD and On-Balance-Volume, with the ADX joining the 'sell' triggers. One thing to watch is the improvement of a relative performance advantage of the Nasdaq over the S&P. 

With the speed wobble in the indices we need to take a look at breadth metrics to see where things may go. As I said last June, the then low *was* a low of key significance. While we saw new price lows later in the year, breadth had already started to recover. Market breadth has continued to improve over this period and while we may see new lows in price, we are unlikely to see new lows in breadth metrics - with more Nasdaq stocks above 50-day, 200-day MAs and on point-n-figure 'buy' signals than at the same point last year. I would argue bulls still have the edge and investors should be buying, but in the near term, prices are likely to continue lower. 

More By This Author:

For Today, Read Yesterday - No Change In State Of Play
Neutral Finish To Week - Indices Ready To Rally.
Minor Losses Keep Things Close To Resistance