On Monday, I noted the negative implications of Friday’s sharp intraday drop in the iShares Nasdaq Biotech ETF (IBB). The bearish price action in this hot sector may have been a harbinger for the broader market. An eveningstar reversal yesterday on the daily charts of the major indices was followed by a sharp decline in today’s session.
Focusing on the S&P 500 chart, it shows the index just below the intersection of its January highs and 50 day moving average. If it can get back above it tomorrow this reinforced level should provide technical support. However, if the slide were to continue, the next support level is this month’s low, and then the 200 day moving average, about a 4.9% move off the eveningstar high.