Nasdaq Composite
SP'daily5
Transports
Summary
The tech sector is struggling to hold the 200 day MA, and a break/close below looks very viable for Thursday. This suggests to me that the sp' will also have a chance at breaking lower to sp'1375.
The daily MACD (blue bar histogram) cycle on most of the indexes is getting pretty low (except for the transports which is warning of a snap lower tomorrow/Friday). So, there is a real threat of a multi-day bounce, not least if we can fall a few more percent before the weekend.
Holding overnight
I remain short, and seeking an exit 1395/1400 tomorrow morning. However, there is a very significant risk of a major gap lower - much like Tuesday, that could see the market drop as low as sp'1375, before a latter day bounce.
I continue to look towards Q3 GDP (to be released Friday morning) as a critical data point. If Mr Market decides it needs to price in a 'likely' US recession (even without the fiscal cliff issue), then a brief snap move to sp'1325/00 seems viable...within the very near term....as in 'days'.
A little more later.