The S&P was most affected by the presence of converged 20-day and 50-day MAs as it finished Monday with a neutral 'doji' just below these moving averages. The small gain was enough to generate a new 'buy' trigger in On-Balance-Volume, but the critical mid-line in Stochastics continues to play as resistance, and this means the bearish outlook is favored. For Tuesday, I will be looking for some downside, but if the S&P can close with another neutral candlestick - and not a big red one (or something better) - then we may have a more bullish response by end of week.

There wasn't a whole pile of buying volume to go with gains, but the Nasdaq, S&P and Russell 2000 ($IWM) all did their bit to keep the nascent bounce going. It has the look of a zig-zag like bounce, but until we see the "zag", these indices gains are set to challenge March highs. Traders have Thursday's lows for assessing any risk:reward longs for the coming week, although if we were to head down there this week it would probably amount to the start of the "zag". Of the three lead indices, the bounce in the Russell 2000 ($IWM) looks to offer the best risk:reward. Technicals remain net bearish, and the move out of oversold stochastics is one I would view with more skepticism than optimism (I want to see a mid-line cross in stochastics to be more confident of a long term bullish recovery), but if it can make a higher low and stay above its 200-day MA it's an attractive option for longs. The Nasdaq has a much larger differential between Frida...

The relief bounce for indices finally hit the first potential reversal point with 'black' candlesticks in the S&P and Nasdaq, and a bearish harami cross for the Russell 2000 ($IWM). Trading volume in the Russell 2000 was lighter than previous days, a positive sign for those looking for more from this bounce. Momentum indicators have moved out of an oversold state, although I like to see a cross of the mid-line before I consider the situation to be under the control of bulls. The S&P closed the day with a more bearish 'black' candlestick, a common reversal candlestick on a bounce, but more so at a new high. Technicals are weak and net bearish that increases the chance for a bearish reversal. Watch for a gap down on the open. It was a similar story for the Nasdaq as for the S&P; a bearish 'black' candlestick on net bearish technicals. If indices do start heading lower, watch for the measured move targets which for the Nasdaq and ...

The Russell 2000 ($IWM) has been guiding towards this, but the positive reaction in the Nasdaq and S&P following Friday's gains in the Small Caps index is not enough to suggest a swing low is in place for these indices. For starters, buying volume was light and momentum remained firmly oversold. The S&P did offer an opportunity at the 50% Fib retracement, and Fib zones give the best indication the decline has found a sustainable low, or at the very least, not one prone to further panic selling.

The divergence in the action between the Russell 2000 ($IWM), and the S&P and Nasdaq continues. If the Russell 2000 could go on to tag its 200-day MA, particularly if it's done on a bullish reversal candlestick, then there would be a good trade opportunity on offer here. Even a rally from here might be enough if there is a tight stop.

While it wasn't the recovery I would have liked, the Russell 2000 ($IWM) managed to resist extending its losses. The index did record a loss, and volume was confirmed as distribution, but I would be a little more optimistic going forward; albeit, a test of the 200-day MA remains favored.

Monday's selling left no doubt as to who's in control of markets. The real disappointment was how little the 50-day MA played as support given how long ago it was last tested. Instead, we are are left looking at alternative support levels for buyers to step in. The S&P moved to a net bearish technical picture after months of been net bullish. It's unclear where support may come in so I have included Fibonacci retracements as a guide. Interestingly, today's narrow range day occurred at the 61.8% retracement line, so we may see some bounce (likely, not much) tomorrow. The 38.2% zone is also near a January peak (and successful support test in February), so if there is no bounce tomorrow, then the 38.2% zone is likely next.