Yesterday's market action was neutral.
The Nasdaq Composite bearishly reversed for a fourth straight day taking the US tech index down a further 0.4%. Volume increased and was above average (Point A).
More selling on heavy volume will have weakened the market however institutional investors did step in to support the index as it approached its 50 day moving average (Point B). This should be seen as constructive behavior.
Leading stocks action was positive. A greater number of leaders were rising in heavy volume compared to those that were falling in heavy volume. When you see this happen on a market down day, it is classed as a bullish divergence. With the markets best stocks outperforming the general indices for a second day in a row, it tells me that the four days of selling may be coming to an end.
For the last four weeks, the Nasdaq has been trading in a sideways corridor. The low of the corridor is 2837 and the high 2988 (Point C). If it can stay above the low of 2837, which I believe it will, I'll be happy. If it breaches this low it may mean the correction is going to last longer than expected.
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