Not much to update other than the fact that all the major US indices did sell off today, which was (is) pretty much the 11th hour as I had stated one week ago today: By my interpretation, the recent technical breakdowns and/or sell signals in these key stocks and indices are still intact or close to triggering (as in the case of the $SPX). However, any significant additional upside in the markets from current levels will begin to rapidly negate these sell signals/breakdowns and therefore, the market needs to reverse very soon, lest the bearish scenario will begin to rapidly diminish.
At this point, I’m still focusing my efforts (and current positioning) on the indices and sectors with the most bearish technicals (small caps, financials, energy) but that’s not to say that I am not keeping a close eye on the other major US & global major indices. The $RUT/IWM remains in an unmistakable downtrend that began with the highs on March 15th and today’s very impulsive, high-volume drop of nearly 2 1/2% from the top of the descending broadening wedge pattern only helps to validate the bearish scenario and increases the odds that the current short trade will meet it’s price target. However, with that being said, the S&P500 and Nasdaq Composite still have a lot of work to do in order to help firm up bigger picture bearish case. From a technical perspective, the longer-term charts still remain bearish but in the near-term, the overall trend still remains up for now and a lot of the bearish divergences and recent sell signals may soon be reversed if today’s sell off proves to be just a one-day wonder. Therefore, what happens over the next week or so will hopefully give some clarity as to where this market might be headed over the next few months and possible throughout the remainder of the year. More specifically, if we do start to get some traction on the downside, I’ll be trying to assess the likely scope of such a correction. Will it be a relatively shallow pullback and a buying opportunity on the long-side or will it be the beginning of a much larger and sustained move lower?