Well today certainly was discouraging for the bulls, but does it mean that all is lost for the bullish case? I took a 1/2 position in the XLK on 6/2 with an imminent MACD buy signal. With today's selloff the MACD is close to a sell signal. However, notice that there is a positive divergence developing in the RSI and volume was lighter than on Friday. The rule for the MACD is that a sell signal that occurs before reaching the zero line is not valid until it is confirmed by falling below the previous low in the MACD itself, not when price falls below its previous low. So, the XLK could very well make a new low, and as long as the MACD stays above its stop, the signal is still valid.
I have marked the January low above as critical support. The XLK is holding above that level so far showing relative strength against the SP500, which is below its January low. It is quite possible that it will dip below that level before we see a bottom.
For the SP500 there are 3 support levels: 1022.85, 1008.55 and 992.73. At this point it appears likely that we will see at least 1023 and probably 993 to 1009 before wave A down ends. For those that are pushing the primary wave 3 interpretation, I still do not see it. We are not seeing a breakaway gap down that would be indicative of that count. What we are seeing is some sort of declining wedge formation that is actually bullish. If that is the case, we could see a massive rally that retraces all the way back to the 5/13 high in as little as 2 weeks. Perhaps that will be wave B up. I don't know, but it doesn't seem prudent to be shorting or selling at these levels at the moment.