Decision time for bulls

Small Caps have reaches a support level which will determine how things will go for the rest of the year. In the case of the Russell 2000 ($IWM) we have to consider what will happen around $209 as sellers confirm distribution; a loss of this level will end the trading range and project a measured move down and through the 200-day MA. 

The Nasdaq gapped down to breakout support which is also a Fibonacci level on the daily time frame. Unlike the Russell 2000, the support level is not one at the bottom of its range - so a loss would open up for a test of the 200-day MA and a mean reversion move. 

The S&P has also tested breakout support, but has also tested its 50-day MA.  If this support level gives way then there is a big gap down to its 200-day MA, which will cause a whole lot of pain should it occur. 

All three lead indices have reached key support and with the week still young we could find ourselves in a very different situation by the time the week is out. 

You've now read my opinion, next read Douglas' blog.

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