All this week I been talking about how the indices were having problems. It started off with the Russell 2000 index creating a "death cross." A "death cross" occurs when the 50-day moving average crosses below the 200-day moving average.
I also discussed on Monday that negative divergences were forming on many of these indices. That means prices are going higher, but are not being followed by momentum. This can be an early warning sign that a correction is coming.
So today's action comes as no surprise, as I was looking for this market to be on the defensive. The question is, how far can these markets fall?
To answer that question, we can use our Fibonacci tool to help us measure some of the key areas that will lend support to the indices. Judging by today’s market action and the fact that tomorrow is Friday, you may want to fasten your seat-belts. As a trader once told me, "they slide faster than they glide."
Every success with MarketClub,