With last week's move to the downside we now have to consider new swing lows for indices, with the ones established a couple of weeks ago unlikely to hold. For many of the indices, these new measured move targets align with earlier swing lows marking a convergence of opportunity. What we have is not an ideal shorting opportunity, but one where value players can pick up some value in the market. Starting with the S&P, we have a pojection for a move to 5,120 that is also the swing low from last summer. This move will send stochastics below the mid-line, but may not reach an oversold state. However, the opportunity for a trading range to establish becomes greater and will help consolidate the gain from the 2023 swing low.

We have had the recovery bounce, now we are going to find out if this bounce is something more than just one fashioned in relief. The S&P had the picture-perfect reversal off resistance, undercutting its 200-day MA in the process. Volume climbed to register distribution, but supporting technicals didn't take too much of a hit. Monday's breakout gap can't close if this is a true breakout gap - i.e. if the gap closes, then a retest of 5,500 becomes favored.

The Russell 2000 ($IWM) could be driving the lead out with a gap breakout of the declining channel alongside a close above the 20-day MA. The bounce off the bottom comes with a 'buy' in the MACD after a successful reach of the measured move target. The next target is redrawn resistance at the red hashed line and/or the 200-day MA.

With the selling pressure we have seen it was no surprise to see markets record a loss. The degree of selling was relatively modest, but it does put indices in a situation where they need to test the strength of the recent swing low. This may take 2-3 days to play out. The Russel 2000 ($IWM) had the most modest loss of the indices and has a good chance of defending $200. Volume has been declining since the capitulation volume low, suggesting the selling is near done (for now). The MACD will likely trigger a 'buy' tomorrow.

It's still a little too early to say, but the bounce is in play and "long" is the place to be. There is a huge amount of overhead resistance and the risk:reward remains tight with moves back to Thursday's lows well within expectations. For the S&P, I would be looking for a rally back to test the 200-day MA, or a fast-falling 20-day MA, whichever is the lowest. Real supply won't kick in until 5,700 is tested, and maybe it will have the juice to get to 5,775 before volume selling makes its presence felt. As the index makes this move I expect to see a decent On-Balance-Volume 'buy' signal, alongside what will be a weak MACD 'buy'; other technicals are likely to remain bearish.

Sellers have to tire at some point and today may be the day. I'm not a huge fan of 'black' candlesticks (higher open, lower close - but a close above prior day's close), but they are only really problematic at tops of rallies, not ends of declines. But for the majority of today's candlesticks, we are looking at spike lows - similar to what we saw yesterday. It will likely be a slow climb, but the risk:reward for longs looks favorablle. The Russell 2000 ($IWM) has a triple spike low at psychological support of $200. We had capitulation volume yeserday, but minor volume today. It's possible we have seller's exhaustion, particularly as the measured move target has been reached (also near $200). Technicals are net bearish and heavily oversold. All signs point to an upcoming rally and a buying opportunity, particularly if you can get a fill close to $200. The S&P spike low has kicked in without any obvious nearby support, but the index is sharply o...

Looking for the positives when there aren't many. The Russell 2000 ($IWM) was able to recover some of its intraday losses, finishing on the measured move target derived from the December-January decline. Volume was also down on previous days, suggesting we may have some sellers exhaustion. The index is oversold and Small Caps are starting to outperform boththe S&P and the Nasdaq.