Stock Market Indexes Topping?

Well, that was fast. The stock market pullback has been sharp and likely is not over yet.

Last week, I shared the same chart, calling it a moment of truth for the stock market. Would the 3 underperforming stock market indexes (in the lower half of the chart) bring down the outperforming 3 indexes (in the upper half)? Dow JonesS&P 500 IndexNasdaq 100 versus the Russell 2000Dow Transportation Index, and S&P Mid-Cap Index.

So far, the answer is yes. Well, at least the under-performers have helped to bring about a short-term sharp pullback.

BUT the question now is: Will the underperformers drag the broader market into a correction… or perhaps a bear market?

Let’s look closer at the chart above.

As you can see, each of stock market indexes in the upper and lower half is testing critical up-trend support at (3). Bulls need these price areas to hold.

If support at each (3) breaks, bearish messages will be sent after small, mid and transports sent a bearish divergence message of late.

This article was first written for See It Markets.com. To see original post CLICK HERE.