Equities fell for a third consecutive day on Wednesday, on mixed trade. After showing mixed price action for much of the day, a late round of selling drug all the majer averages lower. The small-cap Russell 2000 underperformed the rest of the market by a wide margin. By the close, the small-cap index had plunged 2.0%. The S&P MidCap 400 and the Nasdaq slid by 0.9% and 0.7% respectively. The S&P 500 and the Dow Jones Industrial Average both fell 0.3% on the session.

The NYSE fell to distribution for a second consecutive session yesterday. Volume rose on the NYSE by 15.5% but fell by 3.1% on the Nasdaq. However, declining volume outpaced advancing volume on both exchanges. On the NYSE, the ratio of declining to advancing volume ended the session at 2.0 to 1. On the Nasdaq, declining volume topped advancing volume by a margin of 1.9 to 1. Due to light volume, the Nasdaq escaped distribution.

Since its pullback began on July 24th, over the past four sessions, the Direxion Daily China Bear 3x Shares ETF (YANG) has been consolidating just above its uptrend line. Over the past three sessions, YANG has unsuccessfully attempted to rally above its 20-day and 50-day moving averages each day. A move above the July 31st high of $16.48 could provide a buy entry trigger for this ETF.



The market continues to struggle and back-to-back distribution days on the NYSE raises concern as to market strength. Leadership remains fragmented. Ultimately, the only signal in the market that matters is price action, and the market is providing little in the way of follow through.

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.