Tuesday's action had set things up for a big follow through down, but yesterday's trading was very modest. Volume was also well down on Tuesday. Volkswagen's (OTC:VLKPY) disaster cast a malaise on the day, so it was perhaps surprising the news didn't trigger broader selling. While I still think a retest of August lows is needed (at the least), yesterday's action does suggest another bounce may be in the making.
The S&P continues to out-perform the Russell 2000 and yesterday's action was inside Tuesday's range in a possible bullish harami cross; a break of yesterday's high of 1,949 would confirm.
The two side-by-side doji in the NASDAQ make for an interesting play today. It looks a straight coin toss, although the technicals play perhaps in favour of bears. The index looks rich relative to other indices, but rich can get richer. Play a break of the 2-day high/low with a stop on the flip side.
The Russell 2000 did pressure and break Tuesday's lows. Shorts may get the most joy in attacking rallies as this looks to be the index struggling most to attract buyers. It's relative under-performance to other indices adds to the malaise.
Another index struggling is the Semiconductor Index. Technicals returned to net bearish with the August low looking the next test.
While I'm positioned short side I'm not convinced the position will last today. I'll be looking to European indices (DAX in particular) for leads.