Monday’s selling in itself wasn’t too damaging, but Tuesday and today’s action managed to suppress attempts by buyers to claw back those losses.
With indices finishing near Monday’s lows I would now be of the opinion we are going to see further losses.
The biggest worry is the Russell 2000(NYSEARCA:IWM). The bullish handle is still intact, but with today’s close right on support I would be looking for this to break tomorrow. On a more positive note, selling volume was light and the index is still managing to outperform both the S&P(NYSEARCA:SPY) and Nasdaq(NYSEARCA:QQQ). Technicals are approaching a fresh MACD ‘sell’ trigger.
The S&P also closed the day at the lows of Monday, but remained above the 20-day and 50-day MAs. Technicals are still net positive but the MACD and ADX are on the verge of ‘sell’ signals. The double doji sequence could be viewed as a bullish harami doji by optimists – often a reliable reversal signal – but I think we would need an open gap tomorrow which holds for this to be a viable alternative (the first 30 minutes of trading is key for any opening gap).