Distribution Day Number 1

 Today certainly did not help the bullish case, as we closed today just barely above yesterday's low. If it hadn't been for a big rally in the financial sector, this chart would be looking a lot worse, as there were almost no other pockets of strength. Volume was higher than yesterday, sowe have already notched the first distribution day after Tuesday's follow through. On the plus side, MACD histogram is still rising (another day like this will stop that cold). On the negative side, the first level of reistance, the 20dema, was met today, and the market failed there, and that wasn't supposed to be serious resistance.

 The Nasdaq 100 was under pretty severe pressure, and it wasn't due to AAPL, which ended the day barely down. This is apparently seeing a lot of sat the top of the gap from last week, and didn;t even come close to the 20dema. This isn't quite a disaster yet, but it sure looks like it has a ot of potential to become one. 

The Russell 2000 was also very weak today, something we don;t want to see at the start of a rally, but it is also still rising in MACD histogram. It is still is somewhat decent shape, but another day even half as bad as today will kill this new rally.

Here is the percentage of stocks on the Nasdaq above the 50dma. It is gaining strength, but just barely and way below the level it needs to get above to start transitioning back into a bullish phase. Another higher low will be a bullish signal, but the problem now is we can't go much lower, so if the market weakens considerably, we probably won't see it here.

Here is the same indicator on the NYSE, which is also gaining strength, but also from a very low level. Unfortunately, these also hit a lower high on this last leg up, so if that doesn't reverse tomorrow, that could mean big trouble.

Last year at this time thee market was looking almost like it is now (although not quite as bad), just before Bernanke dropped the QE2 bomb on the market at his Jackson Hle speech. tomorrow he gives another one, which will certainly move the market. Which way, I don't know.

I will have the new highs update shortly.