Intra day outlook

I must say that breadth was actually quite OK for such a big down day on the NYSE. The Nasdaq didn’t fare as well. And volume was off the charts. The Nasdaq hasn’t seen so much volume since Nov. 20, which was the low for that period as the high volume that occurred today tends to come at reversals.

What you need to know is the positives first: down volume on the Nasdaq was not quite 90%, the Utilities were green all day, and new lows did not expand (that surprised me a lot).
On the negative side, the market has finally come to a critical point in time. The reason is that the McClellan Summation Index for the Nasdaq ticked down today for the first time since the lows. As you may recall, it has threatened to do so several times but each time the market rallied the very next day. This doesn’t mean it can’t rally tomorrow, but it does mean that it better be a fabulous rally because at this point any down day ought to roll it over.
The next item on the agenda is the Philadelphia Semiconductor Sector Index (SOXX). I have harped away about it, but it is sitting right at an uptrend line.
The ratio of the Philadelphia Semiconductor Sector Index (SOXX) to the Nasdaq is right back at that same uptrend line. A break of the ratio line (and the uptrend in the SOXX itself for that matter) should be considered negative.

Did I have any good news? Sure, the Nasdaq’s decline managed to get it right down to the lower channel line. Oh, it has some wiggle room down to say 1700 but for all intents it’s basically there.
This makes tomorrow a pretty important day. The Employment number will come out in the morning, which surely will move the market one way or the other -- and I couldn’t even guess how it will turn out -- but what I do know is that if the uptrend on the SOXX is broken and that channel on the Nasdaq and Nasdaq volume is negative on the day (more declining volume than advancing volume), it will mark the beginning of the long-awaited correction I forecast weeks ago.

It is still hard for me to imagine this market will roll over easily so I wouldn’t be surprised if buyers step in at some point tomorrow. Keep in mind that next Friday is options expiration so there will likely be some volatility in the next week.