It was a chaotic and messy day that triggered some warning signs. There were several negative developments. First, there was a continuation of the rotation out of growth stocks and into value names. That can actually be a positive, as long as breadth stays positive, but a couple of hours before the close, breath started to drop and the money that was rotating into financials, industrials, small caps, and several other groups stopped.
An intraday reversal on no significant news and a close near the lows is a shift in the character of the price action that can't be shrugged off too quickly; it is up to the bears to follow through to the downside now to show that they have some conviction. That has not happened in a while, but there is no likely news flow in the near term and we are in a seasonally poor time of the year.
There were a couple of other negatives also. The precious metals and miners reversed hard and there was a near-crash in silver. This group has been standout recently, so it was a shake-up for those that have grown complacent with the uptrend. The other issue was the slowing in speculative trading. Virtually nothing ended the day at the highs and the number of 10% plus movers were down to 10 or so names.
Obviously this market has needed a rest and the rotation out of the Nasdaq 100 caused some disruption to leadership, but there is no way to know at this time if a major top is now forming. While the action was poor, sloppy, and worrisome, it wasn't bad enough to push the indexes into a downtrend.
There is an unusually high number of crosscurrents and rotations right now. Markets can correct in that manner, without any major drop in the indexes. We had a taste Tueday, but now we have to see if some momentum builds.
Have a good evening. I'll see you tomorrow.