The SPs laid a bull trap (false breakout) above the previous 20 day high when they closed back below 1886. The Dow was pulled down by selling in IBM and V, (which have very marginal charts). The heaviest selling came in a continued deluge upon small caps. They made a Wide Range Reversal sell when they took out the low of the big bar up. The market also has potential for the weekly charts to now turn down (see charts above).
There is a visible GAP area basis the daily SPs that will be the most important feature for trading on THursday. Often the market makes a partial test into the gap. Other times a full closing of the gap. At any rate, market participants will be watching these levels. The Russell is short term oversold as it has had two BIG days high to low. Does anyone want to pet a burning dog, ?…..The small positive side – the DAX is still holding well….and market breadth was not terrible on Wednesday’s selling.
The Bonds have a Sell Short day but Scalp ONLY. Ten year yield chart had a dramatic break of 20 day lows. Bonds and Russell – consolidation days possible.
EC may have enough downside momentum to put together an extended run. The British Pound is at a critical support level.
Make it a great day!