I shall open with this post by J.C. Parets , who offers a more bullish outlook for markets based on Dow Theory. I would be more cautious, as while buyers have controlled markets over the past four days, all that has done is push indices back into prior trading ranges. We are also in the Thanksgiving period, where volumes fall and junior traders control the desks. The real business returns on Monday. In the case of Dow Theory, the context of the improvement looks to be tied to the relative relationship between the Dow Transports and the Dow Industrials and a potential dead-cat bounce off the test of the 2020 low. A rise in this relationship should be bullish for markets, but this relationship has been in freefall since 2023 as Transports struggled to match the gains of the Dow Industral average. I'm not sure we have a confirmed breakout in the Transports, and momentum (red circle) has remained in the bearish camp despite the rally in Transports. A confirmed breakout in the Trasnp...

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.