The Race is On

After sleepwalking for many trading sessions now, bears are at least trying to make things interesting this morning into a broad market gap down. Indeed, if we are to see some type of market correction before 2017 concludes, then the clock is ticking for bears to make that happen before we dig into the slow, low volume holiday portion of trading around Thanksgiving. 

As I write this, the Nasdaq Composite Index is leading the selloff to the downside, along with the small caps. While those higher beta names lead lower, the Dow and S&P 500 are down, too, but not nearly as much on a percentage basis. 

My preferred approach this morning is to neither panic nor rush in and immediately buy this first real dip we have seen in a while. 

Instead, we want to gauge some objective lines in the sand, so to speak. As an example, consider the IWM, ETF for those small cap growth names in the Russell 2000 Index, below on the zoomed-out 30-minute chart spanning this month, heretofore. 

If buyers can adequately defend $148.50 today, marking prior support this month, it ought to keep this dip shallow. Alternatively, if we see acceleration lower by sellers then it is likely a sign to reduce exposure for a few days, at least, and let bears have some breathing room as we navigate the heart of earnings season over the next two weeks or so.