A good day for bulls delivered a breakout in the Dow Jones Industrials Index and across the board accumulation for other indices Action in the Dow Jones Index delivered not just a break of declining resistance but a close above the 200-day MA. Technicals are net positive but not yet overbought.

It seems every market gain is soon followed by a loss (and a potential shorting opportunity), but each time shorts are left hung out to dry. Will this time be different? Probably not, but whipsaw trades remain a key risk after a bounce like the one we have seen. Of the low hanging fruit, we have a Dow Jones Index which has reversed off resistance (and 200-day MA), albeit with a small bullish hammer (the significance of which is reduced as the index is overbought on near term stochastics - but not on an intermediate time frame). The 50-day MA is available to use as support, and relative performance is positive versus the Nasdaq 100. While action suggests this will break through its 200-day MA, the short position has a small edge until proven otherwise.

There wasn't a whole lot to Friday except that any shorts will have been squeezed by the morning gap. Luckily for them, there wasn't any follow through but there was higher volume accumulation; suggesting there are more bulls than bears - even after a +10% gain from lows.  Should markets undercut the nascent swing low from last Wednesday then there is still a good chance buyers will step in to defend the December low. The S&P didn't do a whole lot outside of the morning gap but neither was there any real change in supporting technicals. Assume bulls have control unless there is a close below 2,600.

Today wasn't the day but every time we get a possible sell/short signal, buyers come in to halt the sell-off.  Tomorrow (or Monday) could be the day markets rally to new swing highs (and hit existing short stops) but action over the last couple of days looked more bullish than anything else. The Russell 2000 was able to dig in at its 50-day MA, with the 20-day MA fast approaching to lend support. Technicals are net bullish but it's price action which looks like it will deliver. However, relative performance is ahead of its peers but it's not strengthening in a manner to suggest it will lead.  Also, its trading just below resistance.. So, look for gain, but if there is an undercut of Thursday's open it could get ugly quick. The S&P finished with a nice inside day, which itself is a swing trade opportunity (trade break of today's high/low with a stop on the flip side of the range). The 50-day MA is there for support and volume even edged a little higher to m...

After two short plays were cut from under Large Cap traders it's now the turn of Small Caps and Tech indices to take a second bite of the cherry. In the case of Tech indices, there is resistance to work with too. The Russell 2000 finished the day with a 'bull trap', reversing Friday's breakout. This is a fresh shorting opportunity with a stop above 1,487. Technicals are bullish so there is no suggestive weakness which may guide to further downside so keep stops tight.  The last stop was whipped out so without clear resistance there is a chance this could follow with another whipsaw signal.

Friday's second day of gains put another squeeze on shorts. Resistance was handily broken on higher volume accumulation leaving markets in an area of indecision with neither shorts nor longs holding a clear advantage. However, each advance strengthens the December swing low as a major low - opening up the next retest as a buying opportunity. The S&P pulled away from congestion on net bullish technicals. Next upside target is the 200-day MA but the index is underperforming against the Russell 2000.

Yesterday's swing trade will have stopped out the aggressive short trades at the narrow doji, where the doji range was used as a stop. Shorts using the 50-day MA as a stop will still have a little room left to play with. Those looking for a new shorting opportunity may use today's doji as the entry trigger; shorting loss of doji low with stop on break of doji high (or a long trade on the reverse break). The aforementioned trade looks clearest on the S&P where it edged above resistance but not enough to break beyond the 50-day MA; I have marked a second (short) entry signal but if it closes above the 50-day MA then the last chance saloon for these trades will be done. It's a similar picture for the Dow Industrials Somewhat ironically, the Semiconductors might have the best shorting play; we have a close near the low of the day after peaking last week. The index is above the 50-day MA but it's not looking like it will stay there much longer. There is an ...

From a pure price perspective, the suggested swing trades broke to the downside, but the lack of follow-through beyond the opening hour doesn't suggest shorts are going to win here.  However, until last Thursday's/Friday's highs are breached the short plays can probably be held until they are decisively beaten. Ohers could look to a hedge with a long trade using a stop on a break of today's lows. With long/short covered the risk is whipsaw. The Russell 2000 was the only index to finish with a lower close and if shorts are going to win out then this is likely to be the index to deliver.

Friday offered a day of tight trading on low volume. Swing traders can take advantage of this by trading a break of Friday's range (buy break of high/short loss of low) and setting a stop on the flip side of Thursday's range (of Friday's if you want to take on less risk). This set-up looks the most logical for the S&P. The S&P again kept to resistance defined by the October spike low and now has the 50-day MA offering some additional resistance. Technicals have edged bullish except the Directional indicator which has been slowing since November; an indication of a possible switch to a trading range. Going forward, I would be looking for a shallow decline, perhaps to the 2,500s, before prices stabilize as a sideways range. Again, look to this a swing trade because if Monday starts brightly and can maintain that strength after the opening half hour it will stress existing shorts into covering their positions and open up for a move to the 200-day MA.

Large Cap Indices finished right on resistance from the October and November swing lows; Tech indices had already tagged and breached comparable levels so the expectation is for a breach here too, but aggressive shorts can look to attack here. Stochastics [39,1] are at the 50-midline - the cut-off between a bull and bear market and both MACD and On-Balance-Volume are bullish.

Today saw Tech indices start to challenge the swing lows of the November and early December lows. How these indices react will determine how other lead indices will follow. First up is the Nasdaq; today's high tagged this resistance (former support) level. Aggressive shorts will have attacked this area but will be forced to cover if there is a close above 6,855; technicals are mixed, but relative performance (vs the Russell 2000) suggests shorts may still be on the wrong end of the trade.

Friday was the finish markets needed to offset the losses from Apple's earlier in the week earnings release. Once again, markets proved resilient in the face of bad news and this can is bullish.  Those who have been buying the oversold (investor) signals can continue to do so. With the move towards the 200-day MA the strength of the investor 'buy' signals weaken; so those buying on the 12-month window can slow to once a month until the next leg down begins. For the S&P, Friday's gain built support for the MACD trigger 'buy' although it lost relative strength against the Russell 2000. Other technicals remain negative as Monday will see its first test of the 20-day MA (soon to be followed by a test of its 200-day MA) and support lows from the October-December period.

Apple's earnings disappointment had set the market up for turmoil, but again, markets were able to hold up against expected weakness. After December's fall into 'Strong Buy' territory, we now have a market immune to bad news which for investors means they can keep on buying. I had looked to the Russell 2000 to be the next market leader and today's losses weren't enough to reverse a prior relative performance gain against the Nasdaq and S&P. Days like today are typically followed by a loss, which here is ultimately a retest of 1,266. Should this happen, traders can protect themselves with GTC buy orders set around 1,270.

I was going to say how well markets did to finish near highs after pre-market action has indicated a possible rout but now we have Apple after-hours earnings report contributing to a 7%+ loss ... An open at 146s would start the stock at the December swing low but the trend is clearly down and technicals - aside from the MACD trigger 'buy' - are not offering any bullish divergence.