The Dip Buyers had a good day today. However, the internals were not as strong as they should have been based on the price development. Therefore, it was a weak rally. While volume was up in the NASDAQ, MSFT, META, and QCOM made large moves all on high volume. Market Breadth was negative to barely positive. It will important to see how the Indices close tomorrow going into the end of the week and end of the month. Based on the weak internals, I cannot lean toward suggesting this is the beginning of a strong rally. That could change tomorrow, but the internal structure of the Indices will tell all.

As I have discussed in the Briefings for the last several days, the Market internals have been very weak both to the upside and downside. While this is very unusual, it may be the Fed announcement and later comments by the Fed Chair, may have changed the determination of value. What will be important tomorrow if there is more downside work to do, will be Market Breadth. The Indices closed at the low of the day, suggesting there should be follow-through tomorrow. However, if the internals are stronger than at the close today, it will suggest a rotation back up. There have been many times when the Indices made a big move after a Fed announcement, only to see it completely retraced the next day. On the other hand, if there are lower prices tomorrow and the internals are weaker than the close today, expect possible acceleration to the downside.

The Indices spent most of the day in rotation, except for the NASDAQ that opened lower and then went into a rotational pattern. There is a Fed announcement at 2:00 PM EST tomorrow that will certainly move the Market, especially if there is an interest rate increase. Additionally, MSFT, META, and QCOM announce earnings tomorrow after the close. Those results and especially any comments on future earnings and financings for AI will move the Market on Thursday.

As you will see in the Briefing, I do not like the internals of this Market. While that can change with the news events tomorrow, I am very cautious and doing my best to sit on my hands. This Market could make a large move, and I fear it could be to the downside. However, neither price development, nor price structure are signaling the possibility of a move in either direction.

The NASDAQ traded lower today on improving internals. The other Indices were flat to slightly higher. While the internals improved today, the lack of buying pressure is very concerning. Low volume suggests there is not much buying enthusiasm at this point, and there is news out on Wednesday. Earnings releases on a couple of critical companies that can move the market are coming up and there is a Fed announcement. Both of these can have a big impact on the determination of value. I have talked with a few traders and most agree, the Market is paused waiting for news that will fuel the next greater degree time and price move. I fear that move has a slightly higher probability of being lower.

The important information the Market gave us today was the NASDAQ trading below important support that has held going back to May of this year. While the S&P is showing slightly more strength, the mid-cap stocks have just traded through support as well. There were some slight internal divergences today, suggesting the possibility of some strength coming into the market, but that was limited to the S&Ps. The percentage of stocks above their 20- and 50-day moving averages continues to decline. Most important and concerning is the amount of selling volume that is accumulating in the NASDAQ. The NASDAQ brings back reminders of the decline in the year 2000. The NASDAQ will need to trade back above the Key Reference Area it traded below to relieve some of the weakness it is showing.

GOOG had a negative effect on the Market as a whole today, with both oil and interest rates adding to the selling. While the Indices were lower today, it was a little surprising to not to seem them much lower. The Market internals continued to weaken but did not reach an extreme. This can allow for more follow-through tomorrow. It is habitual recently for the “buy the dip” buyers to come in at the open and try to drive price higher. If that happens, and the internals are strengthening, expect a rotation up. On the other hand, if today’s lows are broken and the internals are weaker than today, important support will be broken and selling will likely accelerate.

The Indices this week have continued in a rotational pattern with volume extremely low and the other internals more on the weak side as opposed to strengthening. Neither price development, nor price structure give an indication of the next greater degree move. They are simply stuck in rotation. However, GOOG announces earnings today. Depending on the results and forward-looking statements, it could move at least the NASDAQ.

The Internals in the NASDAQ have been declining and have now brought price to a very important support level. Today’s low in the QQQs tested that support and it held so far. Most concerning, as I have discussed through this week, is there is more and more selling volume in the NASDAQ with each passing day. My concern is, if the NASDAQ trades through that support level and the internals continue to weaken, its decline will weigh on the other Indices and that could lead to excessive selling in all of the Indices. This has some similar characteristics as the 2000 sell off. Next week could be a very important week. While the higher probability is always for rotation back up, the weak internals give cause for concern. A break of today’s low with the internals continuing to weaken will suggest the potential for a greater degree time and price decline.

The Indices traded lower today, led by the NASDAQ. Interesting that the intermarket divergences still exist with the Russell showing the most strength in terms of price development, followed by the S&P, and the NASDAQ lagging greatly. Most concerning is that NASDAQ volume increased today, but it was mostly selling volume. Net volume in the NYSE is basically flat. Breadth in all of the Indices is still weak to muted. While it is impossible to determine who or why there was a volume spike at the close and price bounced off of short-term support, tomorrow will tell the tale of either rotation back up, or a breakout lower.

While the intermarket divergences still exist, the Indices are still caught in a rotational pattern, even on a daily basis, opening higher, trading lower, and then back up again. This is likely a result of weak market internals and a lack of conviction on the part of big money that can drive price in one direction or the other. It will likely take a news event to see a breakout move and a trend in one direction or the other. When that move comes, it should be a very good trend, supported by strengthening internals in the direction of the trend.