Markets Fall From Resistance...Break Support

DJIA - 280.01, -2.43% SP500 - 43.28, -3.41% NASDAQ Comp. - 59.95, -2.64% Russell 2000 - 25.57, -3.49% Exchange NYSE NASD Advancing 362 560 Declining 2,748 2,328 Oil $103.26 -$3.08 Gold $792.20 -$10.50 $SOX 319.30 -11.54 Strongest Sectors: XLP -0.52%...XLV -0.86%...XLK -1.74% Weakest Sectors: XLE -6.92%...XLF -6.39%...XLB -3.18% Sector Watch Up Trending: XLP, XLY Sideways: XLF, XLI, XLV Down Trending: XLE, XLU, XLB, XLK Markets fell on Tuesday over concerns with brokerage firm LEH on news that a Korean bank backed away from investment talks with the firm. Stocks were hard hit in all sectors over the renewed concerns in financial stocks. Selling volume in the DJIA on Tuesday equaled Monday’s buying volume suggesting the FNM/FRE rally on Monday may not have any lasting power. Decliners led advancers by more than 7 to 1 on the NYSE and with indices closing near their lows of the day gives more weight to the downside. Today’s selling broke through Monday’s S1 level and in some indices the S2 and S3 levels. Failure to break through short-term resistance is certainly looking more like a renewed down trend in the intermediate term trend. Watch both the short-term lows of the Friday and the July 15 lows. Trade accordingly.

Keep in mind that any rally would need to break above the R1 level of today's large black candles to have a chance of reversing today's selloff.

Index Commentary The DJIA fell from Monday’s high and closed at Monday’s low forming a large black candle…closed at the 61.8% Fibonacci level…fell below its 20, 30 and 50 DMA…again trading below its 20, 30, 50 and 200 DMA…is still above last Friday’s hammer low. The SPX bounced down from the resistance of its 50 DMA forming a large black candle…fell to 78.6% Fibonacci level…fell below last Thursday’s low…still above Friday’s low…trading below its 20, 30, 50 and 200 DMA. The Nasdaq fell below Monday’s and Friday’s low forming a large black candle…fell below its 78.6% Fibonacci level…trading below its 20, 30, 50, and 200 DMA. The RUT fell and closed below its August 26 low which is the support low of the recent M Top Reversal pattern that we alerted readers to last Thursday…formed a large black candle...fell below its 30, 50 and 200 DMA…trading below its 20, 30, 50 and 200 DMA…still above Friday’s hammer low...this appears to be a key reversal point.

Tuesday’s Action Moving Up: CELG Moving Down: FSLR, BIDU, CF, X, POT, MA, CLF, GS, BUCY, LEH, DRYS, SOHU, MOS, ANR, MEE, AGU, PCLN, AAPL, LDK, STRA, IPI, FWLT, MON, CNX, SCHN, NUE, BTU, AEM, RIMM, DECK, GDX, MTL, MER, V, JASO, MS, NDAQ, IBM, ESRX, AMZN, KMT, FMCN, WRC, SINA, LAMR, NIHD, AMLN, SNDK, COH, INFY, EBAY, EXPE, BRCM Intermediate Term Market Trend: Neutral Short Term Market Trend: Down