NEW YORK (TheStreet) -- We told you Tuesday about the fight. Now the winner of the battle between Nasdaq and Russell 2000 against the DJIA and the S&P 500 goes to the Nasdaq and Russell 2000 indexes.
The divergence between the indexes was so prominent that something had to give. The DJIA and S&P put up a good fight on Wednesday, staying green for much of the day, before finally giving in to the broader market selling.
The DJIA closed Wednesday down 98.89 points and the S&P 500 closed down 13.06 at 1852.56. The buy level on the daily trading range for the S&P 500 on Wednesday was 1852, according to internal programs. The algorithm programmed machines and hedge funds use those S&P 500 daily trading ranges as a guide.
The Nasdaq and Russell 2000 index are so oversold by certain indicators that an intraday turn on Thursday can very well occur. The DJIA and the S&P 500 are not oversold by those same indicators. We still have a very divergent market that will require all the indexes to come together.
Investors and traders both need to be very cautious on this market. Are we in a topping process? That is a key question going forward. Tops are not points in time or numbers but are a process that takes time to develop.
Patience and opportunistic trading are the keys in this market environment. This market has many good things going for it. Being to bearish or bullish right now is not the proper course of action. Take what the market is giving you.