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.

Markets remain bullish, but there are still warning signs things are still a little hot. In the case of the Russell 2000 ($IWM), the index closed with a 'black' candlestick that failed to challenge the $252.77 high (that itself was a spike high). Today's volume registered as accumulation, although overall volume was lighter. On-Balance-Volume and +DI/-DI generated new 'buy' signals, with the MACD about to return to a new 'buy' signal.

Trading volume is telling a truer story than price; gains on lower volume, losses on higher volume. The Russell 2000 ($IWM) posted a loss on higher volume distribution. Today's loss came with a new 'sell' trigger in On-Balance-Volume and a bearish cross in +DI/-DI. The large red candlestick from last week is calling, and an undercut of the 50-day MA is now looking like the next move for the index.

Bulls are doing a little better than I expected with the best of the action coming from Bitcoin. The false breakout at the beginning of October delivered the reversal back to former trading range support, as is often the case in such scenarios, before the spiked low and rally off converged 200-day MA and trading range support. Technicals are strongly net bearish, so this bounce will need to do more if it's to fix the weak technical picture.