Interesting divergence at play in markets. Indices attempted to recover Thursday's losses to varying degress of success, but Bitcoin was excluded from this party. The weakest index was the Russell 2000, but Friday's buying surge has pushed it towards a relative performance advantage against peer Nasdaq and S&P indices. Technicals are still net negative and the index still trades below support, but Friday's buying registered as accumulation. The real test won't come until it hits declining resistance.

The pre-market optimism didn't last long, but when markets are coming off an extended high it's hard for buyers to return there, even off the back of 'good news'. The Russell 2000 ($IWM) opened bang on resistance at $237, and then it was all down from there. Volume surged in confirmed distribution, leaving the 200-day MA as the next logical support level.

The early November bounce triggered from tests of 50-day MAs is starting to fade. Many indices are actually trading below the start of that bounce, leaving a large area of overhead supply. While indices are struggling below the band of September-November trading, it will leave a large area of overhead supply when buyers make their return. The Russell 2000 ($IWM) finished with an accumulation day that returned On-Balance-Volumme back to a 'buy' signal after turning net bearish yesterday. Watch for a test of converged resistance of the declining trendline and $237 resistance.

The picture perfect bounce off 50-day MAs is now encountering the reality of doubtful stock holders. The Russell 2000 ($IWM) is important in this regard because Small Caps drive market leadership, and we are not seeing this as relative performance to peer indices continues to deterioriate. The Russell 2000 has returned to a net bearish technical picture, but more importantly, the index has broken the bullish rising trendline. It hasn't yet undercut the lows of the trendline test, but today's solid red candlestick on confirmed distribution is one opening up for a test of the 200-day MA.

We are seeing a technical bounce at moving average support, but how its evolving is subject to intrepration. On the bullish side, we have the Dow Industrial Average making a new closing high (but not absolute high), while bears have staged an aggressive attack against Bitcoin at its 20-day MA. It's not great that tech-bro loving Bitcoin is taking hit on what looked to be a workable low, and its left to defensive (old-timer) Dow Industrials to lead the bullish charge. The one to watch is Bitcoin. A 3% loss on the day is not great, particularly for an asset that has acted all "grown up" since the days of its wild swings. It was notable it reversed from its 20-day MA in what looked like an algo-driven short attack. If it loses psychological support of $100K, then it will likely take tech and semiconductor indices down with it. The lack of Tech leadership from the likes of Elon Musk, Mark Zukerberg and now, Bill Gates, just shows how money can't buy smarts. Unfortunat...

If bulls are calling the shots then I will be expecting next week to deliver a solid bounce as lead indices enjoyed strong accumulation, at 50-day MAs, on bullish candlesticks; a strong trifecta to work off. The Russell 2000 ($IWM) is additionally showing support at converged trendline and the low of the early October big red candlestick. Technicals are net negative, although stochastics aren't fully oversold, which might be the weakest thing you can say about a bounce.

There has been a bit of discussion around blow out tops and the Nasdaq is doing a good impression of one (as is the Semiconductor Index). While we can look at the gap-run over the past few days, we can also look at the relationship of the index to its 200-day MA. In the case of the Nasdaq, it sits 20.4% above its 200-day MA, which only puts it in the 10% zone of extreme historic price action; at 21.4% it will be in the 5% zone and 28.9% sticks it into the 1% zone. The 1% zone is a screaming sell, but the 5% zone, last seen in January 2021, is another. For the record, the January 2021 extension wasn't the absolute high - the index added another 10% before the year was out - but then it gave up 37% from that high. None of this is rocket science, but we need to be aware this run is coming to an end sooner rather than later.