All of the indices are threatening a break to new highs, but the first to do so may be the Nasdaq 100.  The last three days have shaped a small handle, defended by the breakout gap for support, and lurking very close to the breakout threshold at 4,118. Technicals are net bullish although it's underperforming relative to the Russell 2000, which may delay money flow into the index.

Yesterday's decent gain was followed with a consolidation today. The relatively wide intraday range finished with a flat close; a close which remained in the range of resistance. The S&P has a resistance level at 1,987 based on the July high with supply kicking in around September congestion.  This may evolve into a bearish head-and-shoulder reversal: for this to happen, look for a move back to 1,904 (August swing low) without a close above 1,987.  Technicals are bullish, along with the bullish trend in the 200-day MA, so a head-and-shoulder reversal would run against the technical picture. The Nasdaq is coming up against former support turned resistance, and may offer itself as a shorting opportunity. Meanwhile, the Russell 2000 is trading around its 200-day MA. Given the relative leadership of this index, and the fact other indices have breezed past their respective 200-day MAs, I wouldn't look for the Russell 2000 to linger here for too long as it continue

An excellent day for bulls, particular for the Russell 2000. In the case of the latter index, the Small Caps Index broke declining resistance and 200-day MA in an almost a 3% gain. There was also an uptick in relative performance of the Russell 2000 against the Nasdaq and S&P.  This is well placed to continue into a test of the June high (with the September high next).

A rapid bounce, a one-day sell off which looked like something more, then a return to buying. There were important breakouts, but shorts are not out of the game yet. On the breakout front there was the S&P. Yesterday's selling didn't return below support and today put some distance on it. The 50-day MA may play as resistance tomorrow, but given it has flat-lined it may not play as big a role in this regard.

Sellers were going to make an appearance at some point and today was the day they paid a visit. Whether a larger pullback emerges will depend on events over the coming days, but today's selling did occur at some natural attack points for shorts. The S&P finished with a 'bearish cloud cover,' but it did manage to hold declining resistance turned support. The 20-day MA has also entered the fray as an area for bears to work. But this wasn't the most bearish of the indices, and today's finish actually gives bulls a long play tomorrow (for a bounce off support).  Technicals also suggest a bounce.

A fourth straight gain has probably caught bulls by surprise in as much as it has hurt bears. What I had thought would evolve into an Adam-and-Eve bottom may instead become a plain 'ol "V"-bottom. What this sequence of gains does is it generates lots of underlying support for buyers to step in on the next sell off. The S&P was able to break declining resistance and close above its 20-day MA. Volume climbed to register accumulation, although overall volume was well down on earlier selling.  Bulls would probably welcome some tight action near today's highs to help digest these gains. Today didn't give any indication of a bear attack on the 20-day MA.

Today had the kind of action which allows bulls sleep easy: steady buying action from start 'til finish. If there is a concern, it was opening gap downs which greeted some indices. The semiconductor index didn't deliver on its island reversal, but it may yet do so tomorrow. Those who bought today's open will be sitting pretty. What may contain bullish enthusiasm is the presence of overhead resistance at the 200-day and/or 20-day MA, but I still like this for an opening upside gap.

Friday's gains helped put some distance on Wednesday's spike reversals. This will offer bulls something to defend when selling inevitable returns. Friday's action didn't all go bulls' way as key moving averages played a role in halting the advance for a couple of indices. In the case of the Nasdaq, the blocker was the 200-day MA. Friday's high tagged the 200-day MA before weakening - although there was a bit of a recovery into the close. The index is no longer oversold, giving bears an opportunity to turn the screw again.  However, a close above the 200-day MA would give bulls confidence that last week was a low of note.

It wasn't the day I expected, but bulls can take some comfort it wasn't worse.  Some indices fared better than others. The S&P finished on the bearish side, despite closing a little higher. The inside day to yesterday's wide range day looks like something which will deliver more weakness in the days ahead. A close above yesterday's high would confirm a bottom (maybe not 'the' bottom), but this is something for tomorrow. A 2011 style bottom would still need another 5-6% decline to suggest this.

While I think markets are close to a swing low, I'm not entirely sure the bottom is there yet. The wide range day and spike lows are setup for a walk-down retest of these lows over the coming weeks. However, today was a step in the right direction for a near term bounce. Best of the action was in the Russell 2000 and Semiconductor Index. The Russell 2000 finished with a sizable bullish engulfing action that finished the day next to channel resistance. Tomorrow is set up for an upside channel break.

Contained Volatility is perhaps the best way to describe Tuesday's action. By the time markets closed there was little change from open prices, but it was a bit of a roller coaster ride getting there. Not surprisingly, Small Caps had the best of the action, although relative to what's gone before it was a small change, but it's making big ground relative to Tech and Large Cap indices. The index remains within the sharp falling channel, which is unsustainable in the short term and will likely break upside sooner rather than later. At that point, I would be looking for a trading range in preparation for the next move up or down.  It has already tagged the 10% bottom percentile of loss relative to the 200-day MA (at -8.8%, taken from table below), so now is a good time to be taking nibbles on fundamentally strong Small Caps trading at a discount: look for Small Caps breaking or trading near highs (not necessarily 52-week highs: I like looking at action near 6-month highs).

The S&P took another big hit to the face as sellers rushed to the exits in late afternoon trading. The 200-day MA was barely noticed on the way down and the August swing low cleanly sliced.  Technicals are oversold and volume is in line with a capitulation, although I would be more comfortable calling a bottom once the index is at least 10% below its 200-day MA (which is 1,714).

While markets experienced broad selling, it was semiconductors which took the brunt of sellers wrath on weak prospects for the sector. Unfortunately, given the importance of semiconductors at the heart of Technology and therefore, the global economy, there will likely be further repercussions going forward.  The near 7% loss in the Semiconductor Index paid no respect to daily support, opening up support levels on the weekly time frame. The 200-week MA has entered the 61.8% fib retracement zone and is a potential target for the months ahead.

It feels like 2009 again, except markets are still above 200-day MAs, and less than 10% from its highs (bar Small Caps). After the relative mediocrity of summer trading, things look to have been flipped on their head. Except, that things haven't really changed. The S&P hasn't yet tested the August swing low, and will soon have the 200-day MA to offer support. It has only dipped into oversold territory, which suggests a good chance for further losses. With wide range days it's hard to pick entry/exit points, although I would favor a series of inside days from here: a coil would set up a swing trade on a break, but it may take a few days to form.

There was a bit of a scramble on the release of the Fed minutes as panic buyers jumped into the market. It's my opinion, with the exception of the Russell 2000, markets hadn't sold off enough to leave a strong bottom, but today's lows will set up a point of defense for any subsequent selling.  Large reactions like today typically come back over subsequent days, but there is plenty of room for wary bulls to take a bite if there is a walk back to the lows. The S&P gain counted as a bullish engulfing pattern.  Tomorrow it will run into the 50-day MA, and potentially the 20-day MA too. It may even get to 1,987, which had looked so unlikely after yesterday.

It was a day which belonged to bears from start to finish. Bulls never got a look in, and worse still, indices are now challenging the recent October lows. The real challenge is the August swing low, but the Russell 2000 has moved one step ahead with a return break of the May low and a negation of the 'bear trap'. Andrew Thrasher's observations are even more relevant now. The Russell 2000 negated the 'bear trap', pushing itself into a zone of minimal support. Sideline bulls will probably be wary of generating a second 'bear trap' after what happened today. This gives bears a bit of a free run. It will also drag other indices down fast.

Bears did a good job of keeping selling pressure in play with bearish engulfing patterns in the Nasdaq and Russell 2000. There was less on offer from Large Caps, although defensive indices are not as likely to succumb to bearish pressure. The Russell 2000 eroded what little wiggle room it had to support. However, it didn't break 1,090 or challenge the 'bear trap'. There was an excellent article on Andrew Thrasher's blog about a potential bearish head-and-shoulder pattern in the Russell 2000, which makes a lot of sense.

The easy work for bulls is done, now the real graft begins if overhead supply is to be consumed. A couple of indices sit at resistance levels more suited to short positions, but shorts haven't had too many opportunities beyond the recent 'bull traps'. The Nasdaq is perhaps the most vulnerable. It tagged former support turned resistance with the 50-day MA just overhead.  A another leg down to test 4,325 would appear more likely, although a strong start on Monday would put a short position on hold.

I'm not entirely convinced by today's bounce, but it does set a baseline on which to measure risk. There are a couple of long side opportunities. The first of which is the Semiconductor Index: it has reached the bounce zone a little earlier than expected, but while it honors this converged support it has long-side potential. Stops go on a loss of 608.

Bears haven't had too much to cheer as every sell off has been quickly reversed, but today they were given the run of the house. The Russell 2000 was the weakest index heading into today, and it was slapped with another big hit today. However, bulls probably have the best chance for a bounce trade in this index. The index saw a clear cut below the 200-day MA and 1,090, but a push above these levels tomorrow would set up a 'bear trap'.