There was a late selloff in US equities yesterday evening which saw SPY drop quite precipitously at the end of the session, as revealed on the 5-minute chart below.

As suggested here last week, the index has not been able to decisively push through the 62% retracement level which on the S&P 500 cash index lies at around 1110.




A similar pattern was seen on the proxy for the Russell 2000 index, IWM, although it would appear that buyers emerged in the last few minutes in conjunction with the green recovery candlesticks.



The exchange traded sector fund which tracks financial services is beginning to look vulnerable following the impressive rebound from early February weakness but as it approaches the top of the cloud formation, with rather anemic volume, there is an expectation that those playing the long side may be looking to exit the sector in the near term.



The central bank in Australia made some comments late in the trading day that interest rate policy will have a bias toward further tightening which sent the AUD/USD pair higher.

As the daily chart shows, a further move ahead for the Australian dollar now has to confront a rather narrow green cloud formation - and should this prove not to be a barrier then previous multi-period highs become a possibility.

This arises within the context of the US dollar having achieved certain interim goals on the upside, including my recent target of approximately 1.10 against the Swiss franc. I shall continue my move out of long dollar positions, but will be looking for re-entry opportunities which I shall advise on in the coming newsletters.



My comment yesterday that "China Precision Steel (CPSL) has a fairly straightforward pattern which may well result in a strong lift off from the current level" proved to be prescient with the stock opening one cent above the previous close and making possible an easy five percent gain on the session.



Goldman Sachs (GS) also witnessed an abrupt slump in the last few minutes of trading yesterday and will be on my watch screen for possible follow through to the downside today.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.