Markets are definitely starting to look vulnerable, though from a TA perspective the big test will come when key support is tested (support levels from the previous 2018 lows). Here are the levels to watch, with the lower number the most important -
DJIA - 23,500-24,000
S+P - 2550-2600
Nasdaq - 6600-6800
Russell - 1450-1475
These support levels are what Wall St is watching right now, and have their algorithms set for. Support levels for the Russell and Nasdaq could fail, but the big trigger to short will be if/when the S+P fails.
According to the TA rules, the time to go short is when the lower part of the support level/range fails. But it may bounce back up to re-test that level (which is now resistance, since 'broken support becomes resistance'), and when that re-test clearly fails, that is the time conservative TA traders will short. Alternately you can short after the fail but before the re-test, but that's riskier, although if support fails dramatically, more traders will short right away.
The Russell will be the first to break key support since it's almost there now (trading at 1482, with key support at 1450). The Nasdaq would be next.
Other bearish developments include -
The Russell recently had a 'death cross' (50 MA crossing under the 200 MA), the first one since mid-2015, and the Nasdaq will have a death cross in the next several weeks. The S+P will likely have one within the next month or so. Like the 'golden cross', the death cross is a lagging indicator. While every death cross doesn't indicate the start of a bear market, every bear market will start with a death cross..
Even if an investor isn't planning to short, it looks like the consensus on Wall St is that the rationale for 'buy the dip' has probably ended, at least for now. If the markets turn around and regain the 200 and 50 MAs and go to new highs, then 'buy the dip' could re-emerge since the bull market uptrend would be re-established. That is looking less likely at the moment, though you never know what 2019 holds, if the trade war with China is resolved, the Fed backs off, etc.
