More selling hit the Nasdaq while the Dow hangs on. Volume jumped across the board as sellers piled on as earnings season is beginning to sour. After-hours AMZN and GOOGL reported their most recent quarterly earnings. AMZN was down nearly 6% in after-hours trading while GOOGL was up nearly one percent. Small Caps were once again hit the hardest as traders are fleeing risk assets. Our hedges were a good call today and we’ll continue to use them with this market teetering on the edge of a cliff. Stay with the process and cut losses fast.

The Dow is hanging tough while the Nasdaq and Russell 2000 suffer losses. Small caps in particular made a new low and has confirmed a new downtrend. Using IWM as a proxy we can see a trip to the 200 day before we see a meaningful turn for small caps. Relative Strength Index (14) for IWM sits at 34.95. Not quite extreme, but we are in an area where we could see the sell-off accelerate quickly. It would be nice if buyers would step in and reverse this current trend, but it may take some time. Be patient and obey price.

AAII Bulls seem to be non-existent. Perhaps we should put them in the endangered species program. Bears slipped, but remained in the mid-30s. II Bulls are still in the 40s while bears in the 20s. NAAIM exposure index still shows active managers have a fair amount of exposure to equities. Same ole story with sentiment. It will be interesting to see if we continue to push lower how many bears show up.

Not the week we were hoping for on the long side, but we can only trade what the market gives. Enjoy Friday’s action and we’ll see you back here for Halloween!