COMP- We saw the NASDAQ make new highs this morning only to suffer a hefty reversal. Despite an effort for a late day save, the index finished in the lower half of its range and in doing so chalked up a distribution day. That said, this is the first distribution day the index has seen in the last 15 sessions. However, reversals off of wide range bars at extreme levels do warrant some attention. With more earnings being released after the close, tomorrow may be an interesting day as well.
IWM- Tuesday’s effort by the Russell 2000 to escape the penalty box was thwarted today as the index sold off 0.61% on trading that was nearly double yesterdays. We stated Tuesday afternoon that we were slightly concerned about the breakout effort due to the lack of volume accompanying the advance. The index has been struggling to break out of this range for the better part of seven months now lagging behind the others in the process. We have stated here recently that we would feel much better about the current market uptrend continuing if the Russell participated. Let’s see if it can mount an effort on Friday to reclaim breakout territory over the 143.00 level to end the week.
S&P 500- The SPY, the ETF for the S&P 500 also printed a wide range bar today after clipping new high territory and finished down only slightly. This late day save had the index escaping a distribution day, as it finished in the upper half of its range. Even so, today’s action warrants caution when taking into account the action of the other indices.
In summary, we are definitely not waving a bear flag, but it will serve you well to monitor the action of the major indices on a daily basis, as it will help keep you alerted to any possible corrections that may be on the horizon.
-CJ Agresta, Trust The Process Trading