Equities closed lower yesterday on brisk trade. All five major indices ended the session in the red but well off session lows. The small-cap Russell 2000 led the decline for a second consecutive day as it fell 0.7%. The S&P MidCap 400 shed 0.6%, while the Nasdaq, Dow Jones Industrial Average and S&P 500 all slid 0.5%. Sectors performing well included internet services, banks and homebuilders. Sectors hit the hardest included coal, non ferrous metals, precious metals, oil exploration and services and heavy construction.

Market internals were bearish on Tuesday. Volume increased by 6.0% on the Nadaq and 12.1 % on the Big Board. Declining volume topped advancing volume by a ratio of 2.6 to 1 on the Nasdaq and 2.3 to 1 on the NYSE. Yesterday's internals point to institutional distribution, as prices were lower on higher volume. However, the selling was somewhat tempered by the fact that all the major indices were able to rally late and close in the upper half of their respective trading ranges.

The Market Vectors Vietnam ETF (VNM) has been in a basing pattern since February 24th of this year. VNM has been selling off for the past two days and appears likely to test the swing low of $19.08 formed on March 24th. Ideally, we would like to see a reversal candle form on an undercut of this key mark. Alternatively, VNM could stabilize at the current level and reclaim the 20-day EMA. Regardless, a move above the three day high of $20.14 could present a buying opportunity in this ETF.



Yesterday, on a pickup in volume, the iShares MSCI Taiwan Index fund (EWT) put in place a reversal candle as it undercut its 20-day EMA. A volume-fueled move above the four-day high of $13.54 could offer a buy entry trigger in this ETF.


Although yesterday was technically a distribution day, the recovery in prices late in the session helped to mitigate much of the day's damage. Market bears should not have been happy with how the session ended. It will be interesting to see how the market reacts to the last two days of selling pressure on Thursday.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.