Sellers Strike Back

Where for most of 2015 bears often found themselves on the back foot with days of selling undone by one big buying surge, now bulls are finding themselves having to step up at a time when shorts are in control. Today was an ugly day. In terms of relative performance, the S&P has dropped into the 10% percentile of bearish prices dating back to 1950. There was little positive to say on the day. Given the rate of decline, the chances for August/September lows holding as support look slight.

The Nasdaq took a further hit, but not enough to increase the relative weakness of the index. Volume climbed to register a distribution day with September lows not looking like it will hold as support.

The real victim was the Russell 2000. It took a loss of over 3%, which pushed the index to a 15.6% loss against the 200-day MA and into the 5% percentile of weak prices. I took a cheeky long on $IWM, but wouldn’t be surprised if it was stopped out tomorrow. The index has long said goodbye to August/September lows. If there was (any) positive, it was the small uptick in CCI and Stochastics.

The Nasdaq 100 is also looking to a speedy loss of September lows and probably August’s too.

Tomorrow will best be viewed as a damage limitation exercise, assuming bulls are able to mount an attack. If not, then capitulation is next.