Trading Strategies for the Next Leg Down

By: Scott Johnson Thursday, September 04, 2008 6:38 PM

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Today was an important day, with numerous sector and index charts breaking key support. Looking forward, it is now clear we are back in a significant bearish phase. The following index/sector ETF's broke down through important support today: SPY, DIA, MDY, FXI, EWZ, XLI, XLB, and SMH. With consumer sectors down alongside commodities, this was the broadest selling we have seen in quite a while.

Notable was weakness in financials, housing, and retail. Should financials crumble (as seems likely), we are facing a strong general downturn here.

- XLF dropped almost 5% on increasing volume.

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