Friday marked the beginning of potential swing lows for the indices, although it will take more than one positive day to confirm such lows.
The Nasdaq is bearish across all supporting technicals including relative performance against the Russell 2000. The next test for this rally is the 50-day MA and converged trend support and 20-day MA.
The selling we have seen had much in common with that of February's, and because of that, what we are looking at is the development of trading ranges which will maintain a neutral outlook until there is a breach of March swing lows.
The Nasdaq is perhaps the most vulnerable given prior strength, but it has started to underperform relative to the Russell 2000 as momentum moves into bearish territory but is not yet oversold.
Yesterday was the warning shot, today was the follow through, but there was still sufficient latent demand to at least take indices near to where they finished yesterday. While at one level we have breakdowns, if we take a step back we are looking at a return to trading ranges. Tests of the 200-day MA are next on the list of major to-dos but it will take time to get there.
I wanted to see more from the Nasdaq support test but Friday's doji came in with a neutral 'spinning top' - not the ideal candlestick you want to see off a successful support test. Technicals are mostly negative with a relative underperformance to the Russell 2000. When you look the big picture, the current action in the Nasdaq lllo
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