Nasdaq Thursday closed down 40 points at 6,382, significant to technicians because it fell below Wednesday's low of 6,416, after shooting into record territory on the open. Nasdaq Wednesday had set a third record close in a row. For the month to date, it was still up just about 4 percent.
Scott Redler, partner at T3Live.com, said the reversal was evident in the QQQs, or the PowerShares QQQ Trust ETF, which represents the Nasdaq 100. The ETF opened at an all-time high Thursday but then fell below Wednesday's low of 144.53, a classic outside reversal. It ended the day down 0.6 percent at 143.96.
PowerShares QQQ Trust, 3 month, bar chart
"On Facebook's earnings, it gapped everything up, and basically they sold the news, causing a big outside bearish reversal in tech. That was a little bit of a red flag. The QQQs were at an all-time high," Redler said. "It's pure technicals. You open up above a momentum level, go through it, and people start to sell. Technology opened up strong and basically reversed."
The QQQs traded over 77.2 million shares as of the close, almost double its 30-day average of 39.8 million shares.
The Dow and S&P 500 did not see the same type of "outside" move, and the Dow in fact closed at a record 21,796, up 85 points. The S&P 500 was down 2 at 2475.
"The fact you made a new high in the Dow and didn't reverse, the old guard would call that a day when the tape was being painted," said Gartman. "If they had all reversed to the downside, it would have been much more impressive." But he said the fact that tech has been leading the market's gains makes the reversals in the QQQs and Nasdaq significant.