"If he be Mr. Hyde" he had thought, "I shall be Mr. Seek"

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Robert Louis Stevenson, The Strange Case of Dr. Jekyll and Mr. Hyde

Tuesday night I wrote, “Hard to say whether the market hit bottom from its two day indigestion or whether Tuesday's session will turn out as more of a respite or “a market in denial” which now might really become that sick..”

Is the market that sick? All the internals have indeed turned negative, but we have been there before. The S&P 500 failed 204, a key area of support. IWM or small caps, managed the inside day, which of course is not surprising considering the huge range it had on Tuesday. NASDAQ held Tuesday’s lows also establishing an inside day.

It was DIA I found troubling after it could not close above Monday’s low on Tuesday while confirming a topping candle. DIA, although the uptrend remains intact, has the best support a bit lower at the 173.50 area.

Public perception of low Treasury bond rates has totally wavered between a Dr. Jekyll/Mr. Hyde scenario. When the market has turned down over recent years, the FED easing and pumping became adrenaline for equities. However, we have seen (and are currently witnessing) the reverse. At certain junctures, low rates present more insidiously, suggesting a flight to safety and waning confidence in what the “robust” economic data has suggested.

Therefore, easiest advice is use the inside day rule I have written about repeatedly. In IWM and QQQs, follow up or follow down. In the IWM, the range break to the lows suggests a Mr. Hyde metamorphosis to the 200 DMA at least. In QQQs, a break of 103.04 brings it to 102, maybe even 101. Flipside, Dr. Jekyll emerges!

S&P 500 (SPY) Starting to look a lot like September instead of Christmas. That will change if this can clear over 205.

Russell 2000 (IWM) 114.27 is the 200 DMA. 117.05 pivotal and much better looking

Dow (DIA) A good bloodletting, could have more. Seems selling rallies makes sense until this sees 178 again

Nasdaq (QQQ) Above are the numbers we could see to the downside. What would reverse that is a move over 105.20

XLF (Financials) 24.55 pivotal at the fast moving average.

KRE (Regional Banks) Here we go again testing the major moving averages.

SMH (Semiconductors) Some support at 54.00

IYT (Transportation) Attempted to fill a gap from Monday but still could not. Vote for first one to reach the 50 DMA below

IBB (Biotechnology) Inside day which makes this another group to watch for the range break

XRT (Retail) This could give IYT a neck and neck finish to the 50 DMA below.

IYR (Real Estate) 2 inside days near the highs and outperformed-good one to watch

GLD (Gold Trust) Narrow range inside day, which suggests it remains friendly near term unless it crack under 115.75

GDX (Gold Miners) Unconfirmed phase change back to bearish. Over 20.00 on a close looks good

USO (US Oil Fund) Really oversold now on all timeframes. But we need evidence of bottoming action

XOP (Oil and Gas Exploration) Of all the energy related ETFs, this one at least held the lows from Monday and Tuesday on a closing basis. I’m taking probiotics, perhaps this is as well

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs At this point, we could see some consolidation, which would be a relief for the market I would assume