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.