Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Both the NASDAQ and S&P 500 are flirting with their 20 day moving averages after falling below them; the same goes with the Russell 2000 in relation to its 50 day moving average. That said I find it remarkable the S&P 500 is down only 1% as my watch lists don’t look any different then they did a few hours ago. Perhaps it is because the Russell is down almost 2%. But it is definitely a day where the high beta names remind you how far they can go down in very short order. Much like many of the days in latter 2011, stock picking is out the door as nearly everything is moving together.
The obvious question here is, is this a replay of early March where all the indexes broke key support and then a news story about a new Fed program sent everything screaming upward in a V shaped rally for 2 weeks immediately after? Or is this going to be more lasting of a correction than “3 days and all is forgotten”? It would seem almost disingenuous if there was a QE3 story floated in the paper tomorrow.
This should be the sixth distribution day in the past 5 weeks, a point where the IBD crowd will raise warning flags. The S&P 500 is holding last week’s lows but the NASDAQ has not; the latter index has been the leadership of the year so it is another caution flag.
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