There's only one word to describe Wednesday's action -- Fugly! All the indices sold off in higher volume. That makes the 4th, 3rd, and 2nd distribution day for the Dow, S&P 500, and NASDAQ, respectively, since September 8th. IBD preaches that you don't want to see more than a couple of distribution days within a couple of weeks (if you're a bull). Even with all the selling, the charts don't look too bad. The S&P has slipped back into its June - August trading range and the Dow is very close to doing the same. My stochastic indicator is quickly approaching oversold levels and price support appears to be nearby. It's looking like we may be setting up for a try at a bounce around 1,000 on the S&P and 1,820 on the NASDAQ. But I won't try to be a hero and blindly buy at those levels. I want to see some bullish reversal candles before I start looking for any buys.
Another Distribution Day
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The trend has changed, though. Looks like the inflection point was last week, and now we're sliding. It does seem overdue for a little pullback.