My recent calls for caution heading into hurricane season received significant technical support yesterday as U.S. equity markets provided little in the way of constructive price action. In fact, both the Nasdaq and S&P 500 posted distribution days – closing lower on elevated volume. The Nasdaq lost 0.81%, Dow Industrials slipped 0.34% and the S&P 500 fell 0.51%. Volume rose 9.4% on the Nasdaq and 3.71% on the NYSE. Our August tranquility and modest drift higher in prices was rudely interrupted yesterday as volume picked up in the afternoon – gaining velocity into the closing bell. Internals were no refuge as losers led winners by 2:1 on both the NYSE and Nasdaq. The Nasdaq and S&P 500 closed below their respective 10-day moving averages for the first time since the onset of the post-Brexit rally. Simply put, the outlook for U.S. equities has now shifted from “confirmed uptrend” to “under pressure.”
Read my complete post outlining the themes for a pause on Equities.com here