Following Monday's session, we were waiting for a confirmation from our breadth Index that the uptrend was over.

This is done tonight.

It is important to notice the violence of this trend reversal: our Sigma Trend Index is already at oversold levels (-77), and this happened in 3 sessions only!!!!

A short term bounce back could happen from these levels, but what is next?

The breadth index closed for the second time in negative territory, confirming a trend reversal signal.

The summation 21 index continues to quickly deteriorate. We are now close to negative territory on this index too (left scale).

Conclusion:

When we look at price action in famous index such as SP500, Nasdaq and DJ Industrial, it looks like this move is just a pullback in an uptrend.

When we look at damages in our Sigma Trend Index, Breadth Index and the Summation 21 Index, it sounds like something really bearish is under development.

For sure, some indexes are heavily oversold (Dow Jones Transport and Russell 2000) and this situation could trigger a short term bounce back. But if the Breadth Index and the Sigma Trend Index can't move quickly in positive territory, then a sharp correction will occur.

Have a nice day,