The Nasdaq had the best of the action. A bullish harami after new lows offers a suggestion for higher prices tomorrow. The problems for bulls will start if the index makes it to Oct-Dec congestion zone and/or overhead moving averages.
The S&P recovered a good chunk of yesterday's losses and has so far held on to the August/September swing lows. Oddly, technicals didn't really improve in the face of today's advance.
The Russell 2000 may have closed with a 'bear trap', but it requires confirmation as the move is still vulnerable to reversal. This index is the most oversold and the weakest of the lead indices. How it performs will be key for the health of the broader market.
With 2015 firmly in the rear view mirror, overall action for last year has the look of professional distribution. So how markers react when/if they get back to testing highs will be key. For the Russell 2000, it will simply be a question of getting above 1,078.
But baby steps first, markets need to string a couple of higher closes which don't get swamped by one big red bar. There is the advantage of heavily oversold conditions - last seen in 2011, and 2008 before that.
You've now read my opinion, next read Douglas' and Jani's.
Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
Follow Me on Twitter
Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I also trade on eToro and can be copied for free.
JOIN ZIGNALS TODAY - IT'S FREE!