Despite all of the Apple, Amazon, and QQQ movement last night and today, the small caps in the IWM and the semiconductors in the SMH continue to hold their bullish divergences we looked at yesterday. In other words, even as the SPY and QQQ make marginal new correction lows, IWM and SMH, two areas of the market you’d expect to get slaughtered far worse than the bigger indices, are diverging and not making new lows.

On the first two charts, note that both the Q’s and S&P made new lows since Tuesday’s sell-off. Contrast that to the small caps and semis, all on their respective 30-mntue timeframes.

Divergences are not assurances, by any stretch. As I wrote yesterday, there is a certain “well, it’s either one, or it’s the other” nature about them. However, the longer they hold on and stay intact in the face of calls for an imminent washout, the less likely we see a meaningful move lower further in the broad indices, despite how awful the market may look or feel.

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