Today’s update reveals a reversal and breakdown market trending down against resistance.
Let’s take a look at what’s happened, what levels are important now, and of course what message Sector Breadth is sending.
The 1,875 index level was the key support or inflection level that held price up ahead of the mid-day breakdown.
The initial gap down against resistance (1,885) set the stage for a bearish session that later devolved into a strong Trend Day Down (see my “Compilation of 21 Posts on Trend Days” for additional information).
At this point, we’re monitoring price for a potential closing rally or retracement up potentially off the 1,870 level. Note the dual divergence picture that suggests that 1,870 is a key support level into the close.
It shouldn’t be a surprise that Sector Breadth is sending a bearish message – but it’s not completely bearish:
Yes, we expect to see strength in Health Care and Utilities on a bearish or sell session, but we continue to see strength in Energy which has been a recent trend.
Surprisingly, we see some strength in Materials and Industrials and weakness in Staples (surprising) and Financials (not surprising on a down day).
We can take it a step further and highlight our top intraday Energy Stocks (the strongest sector of the day):
A quick scan shows Anadarko (APC) and EOG Resources (EOG) are the strongest stocks in the strongest sector at the moment.
Similarly, we can see relative weakness in AIG and E-Trade Financial (ETFC) as the weakest stocks in the weakest sector today.
Bank of America (BAC) continues its slide (see my prior update on the likely trend reversal and breakdown pathway for BAC).
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade