David Fuller's view

Sentiment on Wall Street has deteriorated in the last two days and price charts will soon show us whether this is another small reaction and consolidation within the uptrends or something bigger, such as the long overdue 10% plus correction.  These indices are currently reacting from somewhat overextended conditions relative to their 200-day moving averages.  They are also near round number psychological target levels where reassessments can occur. 

The Russell 2000 Index of smaller companies would give early evidence of trouble by retesting its range lows extending down to 1080.  Conversely, a smaller pullback and consolidation, followed by new closing highs, is now required to reaffirm the overall upward trend.  Earlier this year the Nasdaq Composite Index lost its uptrend consistency seen since 2013.  However, support near 4000 held and it at least temporarily reaffirmed the uptrend, but another look at 4000 would confirm an upside failure and further loss of momentum.  The Nasdaq 100 Index has been stronger recently but is clearly overextended relative to its MA.  The S&P 500 Index has been a model of consistency but is overextended relative to the MA, while also near a major psychological hurdle in the 2000 region.  The Dow Jones Industrial Average is only slightly overextended but a close beneath 16,000 would indicate that underlying support was being eroded.

(See also my PowerPoint presentation beneath the third email below, which also has an accompanying Audio.)