Market Slips Further After Key Reversal Day

The market opened relatively flat on Tuesday and drifted lower during the day. The Nasdaq closed down -17 points (-0.44%), the S&P fell -3 points (-0.20%), and the Dow slipped -8 points (-0.06%). Volume was less than Monday's volume. The down volume beat up volume by a ratio of 2 to 1, and decliners beat advancers by the same 2 to 1 ratio.

Today the Nasdaq closed below its 10 SMA. If price does not regain the 10 SMA in the next couple of days, further downside is more likely. Also, Monday was a key reversal day for the Nasdaq, opening higher and closing lower. If the market does not get a lift by the end of this week, there will be a key reversal bar on the weekly timeframe. That would add further concern over the potential for a correction.

Here's something interesting to note. The market corrections  May, August, and October all began when the weekly Nasdaq was 13% above the 50 EMA. The November highs put the current market 13% above the 50 EMA. If the market repeats its prior behavior, we're ready for a retracement period (correction).