It doesn't matter which of the equity indexes you check out. Tuesday was a terrible day for everyone.
The hopeful bull is sure to note that except for the iShares Russell 2000 ETF (IWM) , the major index ETFs are still trading within the same range they've been in for the past three weeks. But if we take, for example, the SPDR S&P 500 ETF (SPY) , it's easy to see that unlike prior dips over the past few weeks we now have the 14-period Relative Strength Index (RSI) back under 50. Like the SPY, the IWM and Invesco QQQ Trust (QQQ) closed beneath their 21-day exponential moving averages (EMAs) and the RSI on both ETFs also broke beneath 50.
The ugliness of the charts notwithstanding, short-term traders shouldn't rule out a near-term rally. I wouldn't bet heavily on the rally sticking for more than a couple days, but if you're only looking for a 1% or 2% snapback rally, I think you've got a fair shot.
On the QQQ, you have reasonably obvious price support around $180. Add to that the volume-weighted average price (VWAP) anchored to the Nov. 3 swing low (the lowest close before the current horizontal consolidation) is also at $180 and we have a reasonable expectation for a bounce. Your risk is a close under the 50-day simple moving average (SMA), which is sitting around $277.
With the IWM closing beneath its three-week channel support on Tuesday, I'm inclined to leave the small-caps to someone braver than me.
The SPY, however, looks OK for a bounce as long it holds above its channel support near $390. The caveat here is that a break of $390 doesn't have much in the way of support until the 50-day SMA, and that's down near $381.50.
Regardless of what ETF you're trading, if risk mitigation is at the top of your checklist, consider staying out of the market and remaining on the sidelines unless price is holding above the day session's VWAP.
