Keep an Eye on Support Levels

On Monday, the market opened slightly up, but then it fell into the noon. It found support over the lunch hour, then sauntered upward in the afternoon. Around 3 p.m., it sold off mildly but held above the noon time lows. Down volume edged out up volume by a ratio 1.3 to 1, and decliners beat advancers by a ratio of 1.1 to 1. The bears won the day, but did not do much damage.

The Nasdaq and S&P have been down 5 out of the last 6 days. Both indices closed near their lows of the day, suggesting that selling could continue tomorrow, at least in the morning session. The market is still above downside support levels (Nasdaq 4,080/4,050; S&P 1,810/1,800). 

Market risk of a correction is still high, and today's price action continues to show a market susceptible to bearishness.  It is too soon to declare a market top, and the momentum is still to the upside for the long-term and intermediate-term. RSI 20 for the Nasdaq is at 59, so the market has the strength to bounce if the bulls step in.