Yesterday established a round of profit-taking after Monday's breakouts had suggested something more positive in the works. Unfortunately, another round of selling ranking as higher volume distribution left indices in a more precarious state.

The Semiconductor Index had come close to tagging 1,400 but the index looks to have confirmed a bearish ‘evening' star as part of a double top. A drop below 1,340 would send bulls running to the hills and open up tests of the slower rising channel and 200-day MA.

The Nasdaq held up better in the face of selling with technicals hanging on. Relative performance managed a new swing high in the process.

But the same could not be said of the Russell 2000 as relative performance accelerated lower. The index is struggling and a third test of the 200-day MA – should it occur (and probably will) – is unlikely to hold.

For tomorrow, longs will not want to see a third day of selling as this will simply embolden shorts and keep any potential buyers on the sidelines.