I was going through my charts and came across one I don't normally look at, but I thought it was interesting. The S&P ratio of equal weight, $RSP, to the S&P, $SPY, has reached a value below that of the 2009 bottom. I'm not sure of the significance of this yet as the S&P ($SPY) hasn't reached any capitulation low, but if there is a long trade, then this is one such opportunity.

Thursday's selling didn't deliver 'bull traps' for the S&P or Nasdaq. In fact, the Nasdaq breakout looks ready to accelerate higher. When we look at relative performance, the Nasdaq is surging away from both the S&P and Russell 2000 ($IWM). Where's there's a kink is the 'sell' trigger for On-Balance-Volume, although the indicator itself is flipping back-and-forth across the trigger line.

Sellers made more of an impression on the markets today. The Russell 2000 ($IWM) dropped out of its 'bull trap' challenge and into its prior base. In doing so, the underperformance relative to the Nasdaq accelerated, although other technicals are net positive. After today, the move to test the 20-day MA looks the most likely outcome over the coming days.

It was perhaps a little premature to pop the champagne on the Dow break of 40,000, but it looks like it will be a few more days before the psychological 40K level in the rear view mirror. Today's losses were not excessive, and didn't reverse the breakout, but there is the potential for a longer move back to its converged 20-day/50-day MAs. The index is underperforming the Nasdaq 100, which is bullish for the broader market, but not great for the Dow; if there are traders looking at a value entry, 38,500 would be a good place to start (if it gets there).

There wasn't a whole lot of drama to Friday's action but it was telling that there was no undercut or 'bull trap' left to linger into the weekend for either breakout in the S&P or Nasdaq. On Thursday, we did see potential reveral candlesticks in these indices, but there was no return on them by Friday's close. However, I was disappointed with the number of penny stocks that were picked up by my breakout scan on Friday, suggesting there may yet be trouble ahead for the indices. However, there is a tonne of support for traders to lean on, even if it takes a 10% loss to get there. The S&P may be underperforming relative to the Nasdaq, and the last couple of days have seen buying volume fall, but the breakout is very much intact and technicals are solidly bullish.

Bit by bit, the bearish thesis I had outlined in April is no more. Today delivered strong breakouts for the Nasdaq and S&P, although the Russell 2000 ($IWM) still has some work to do. The S&P delivered a clean breakout on higher volume accumulation. A technician couldn't ask for a better move. Now it's up to the market to deliver on this promise. One thing we need to watch is the relationship of the S&P to its 200-day MA; at the moment it's 12.2% above this moving average which is in the 10% extreme zone of historic overboughtness. If it gets to 14.4%, it will be at the 5% level, and at 18.1% it will be at the 1% level, and becomes a strong 'sell'.

Friday's highs continue to play as a top but today's losses didn't undercut Friday's lows, leaving things in a bit of a 'No-Mans-Land'. The Nasdaq returned to a 'buy' trigger for On-Balance-Volume and kept its challenge of the 'bull trap' intact. This could still go either way.