We're now oversold short-termU.S. indices

Today was another ugly day in the three-week decline and it looks like we may be culminating in a spike low here. After the Dow broke support at 9800, the S&P 500 broke 1050 and the NDX went below the May 10 low, we really spilled out in the last 35-45 minutes and ended up closing at the lows for the day going away, very negatively.

We were down 215 on the Dow, 26 ½ on the S&P 500, nearly 50 on the Nasdaq 100, and the SOX Index got pummeled nearly 6% today, down around 25.

The day started out with a small pullback, a consolidation and a one-bar rally that failed miserably. The market then came down hard and went into another sideways movement which we've seen a lot of over the last few days which appeared to be a basing or consolidation attempt. Then just before the market started its decline we had another one-bar breakout that appeared to be triggering an upmove, but that failed miserably as well. The market rolled over and closed at the lows for the day going away.

The technicals bore out the negative action, with 876 up and 2340 down on New York, and even worse on Nasdaq with 891 up and nearly 2600 down. Up/down volume was terrible on both exchanges, with only 114 million up and nearly 1.5 billion down on Nasdaq, about 12-1 negative, getting to climactic-type behavior. Up/down volume on New York was 159 million up and 1.144 billion down, about 8-1 negative.

So we're getting near-climactic behavior, very poor technicals, and a market that's coming down very hard. The S&P 500 has now lost 40 points in a day and a half since Friday afternoon. The Nasdaq 100 has dropped about 90 points in that period of time. The Dow broke critical support today at 9800 and with the breaks in the various indices support is now suspect. We are now approaching the 1142 May low on the Nasdaq 100, which is only 16 points away.

We're now oversold short-term on many indicators and we may get a decent bounce here. Also, the indices are at or below their declining channels and they're in a spike-down mode that's taken us too far away from the moving averages and thus we could see a snapback rally as early as tomorrow.

Good trading!

Harry