David Fuller's view

The S&P 500 Index is just beneath its declining MA and the 2000 region which probably has fewer psychological implications today as this level has been frequently crossed since 2Q 2014.  Nevertheless the overall pattern has top formation characteristics, now including lower highs, so overhead supply represents an important barrier. 

The Nasdaq 100, Nasdaq Composite and DJIA all have similar patterns.  While moves above the MAs could boost sentiment and provide some additional strength, thereafter overhead supply is likely to limit upside scope. Downward dynamics would confirm that supply is regaining the upper hand, following short covering and some renewed demand since the range lows held. 

The Dow Jones Transport Average was the early downside leader and fell considerably further than the indices above.  However, following a climactic low it has seen its best rally since the 2014 peak and is now testing initial resistance.

The Russell 2000 Index of smaller companies was the first to show a loss of upside form and this year’s downward break confirmed a deterioration in market breadth. It would have to rally considerably further to confirm a clear improvement in breadth. 

Additionally, iconic Apple and the previously high-flying Nasdaq Biotech Index are clearly underperforming, albeit currently oversold.  Arguably, these are now buying levels for patient investors but we should not expect a quick return to earlier upside form and the recent lows have yet to be confirmed. 

In conclusion, Wall Street has seen some important lows but the best case for diversified indices is likely to be a lengthy period of sideways ranging.  The most inform sectors should be resources, including precious metals.  After all, very few people owned them in January but a considerable number of momentum traders were short.