Markets swooned lower on Tuesday, with the Nasdaq, S&P 500 and the Dow all falling between 1.5-1.6%. Volume was elevated and all of the 3 aforementioned indexes close hard upon their lows, hallmark bearish characteristics. Already for the week the Nasdaq is down 2% and the S&P 500 by 1.7%, and both are looking at rare 3 week losing streaks. Of course it is still early in the week, but that has happened only once in 2014 for both indexes. The S&P 500 did it early on in January between the weeks ending 1/17-1/31 where it fell 3.3%, and the Nasdaq had its 3 week losing streak between the weeks ending 3/28-4/11. They both bottomed the next week at their 200 day SMAs and marched higher from there. The gap between the YTD gains of the leading Nasdaq and S&P 500 is narrowing as well, and it is now just a fraction of a point. The Nasdaq at one point this year had a 2% plus advantage and this indicates risk continuing to come off. One thing I like to do every night is scan the universe of stocks in search of good long sets up via cup with handles, double bottoms, etc. and that has become a task almost not worth undertaking. They are few and far between and remember breakouts in a weak environment are failure prone. One thing for certain is that the 200 day SMA on the S&P 500 will be a battle ground as it aligns very closely with the round 1900 figure. A pierce of that line would also wipe out the series of higher highs and higher lows.
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