On Tuesday, the stock market rallied sharply in the morning. Both the Dow and the S&P 500 made a new record high, but NQ failed to make a new higher high. Selling came with a vengeance in the afternoon, tanking the stock market hard.
Recent rallies has been sold aggressively, a clear sign of a distribution topping price action, insiders downloading their positions each time the market was engineered higher. These price action is going to continue until they are ready to tank the stock market.
On the short term timeframe, key inflection price level for NQ on Wednesday will be at 5920, support will be at 5900 then if that does hold the next lower support is at 5870.
Here is S&P 500 monthly chart from 1995 to July 2017, with a 12-MMA. Although the bull market momentum on the monthly chart is still very healthy, the bull market is clearly way overstretched to the upside, and it is in its 5th wave up from the 2009 bear market low, thus vulnerable to sharp and sudden heavy selling.
