Markets began in the red Tuesday and were never able to get the heads above water. A mild rally around mid afternoon lost steam going into the close and the benchmarks lost ground in higher volume. The Nasdaq and the S&P 500 lost roughly .7%. The S&P 500 managed to find support at its 50 day SMA, but that support looks tenuous. Is it headed for a third piercing of that line since January? It sliced that line on 1/24 and again on 4/10 falling by exactly the same amount of 2.09%. A third undercut could prove its undoing and perhaps set the stage for a move back toward its 200 day SMA in the near term and will by that time probably be in the neighborhood of the round 1800 handle. That index has been doing much of the heavy lifting this year with its exposure to strong groups like energy and transports. The S&P 500 is still vastly outperforming the Nasdaq as it still lies just 1.5% from all time highs, whereas the Nasdaq is off more than 6% from its recent 52 week highs. No sectors showed a gain on Tuesday showing just how broad the selling was. Energy which we mentioned earlier is even starting to show some signs of instability. Names like CLB DRQ PVA FI have all soured after recent earnings reports. The retail group displayed vulnerability today, perhaps suggesting a weak consumer. Names like DKS URBN fell like stones today. Both of those names have now lost one quarter of their value from their most recent 52 week highs.

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