Breakdown in Semis, Financials, Retailing a temporary negative to stabilization efforts

The selloff took a turn for the worse with Monday’s breakdown to new multi-day lows for SPX, DJIA and QQQ.   Nine of 11 major S&P Sectors fell more than 1% on the day, while four sectors, Financials, Industrials, Discretionary, and Technology dropped more than 3%.  While the trend over the last week had been largely more sideways than bearish, Monday’s drop undercut SPX 4250, turning trends more negative.  While I expect weakness should prove short-lived at this point, it is right to have a defensive stance until SPX can reclaim 4250 on a close.   Pullbacks look to have a good shot of testing and undercutting late February lows, with the most meaningful support under 4114 from 2/24 found near 4000, a level which would allow for wave equality.  Overall, having a “bullish over 4250, bearish Under” stance makes sense until more evidence of support arises.  Longs should be focused in “Utes”, Energy and Defensive groups.

Recent Technical Developments worth highlighting

The churning of the last week gave way rapidly to selling on Monday, which appeared very much like the start of a capitulation—like wave lower as multiple groups which were holding near support broke down to new multi-week or multi-month lows.

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