Despite a solid Thursday/Friday there are warning signs to suggest the recovery is not all it seems.  For the Nasdaq Summation Index it was a straight down week from an overbought state.

The S&P lived up to its potential with a defensive rally off the 50-day MA / channel support (take your pick). Next test is channel resistance at the 20-day MA. Technicals likely to turn net bearish tomorrow despite bullish recovery.

Just a quick update as I didn't do a post after the market close yesterday.  Selling continued to drive markets lower, confirming a large negative divergence in Nasdaq breadth (Percentage of Nasdaq Stocks above 50-day MA) with increasing technical weakness.

Yesterday's bounce didn't last long as indices struggled to defend 20-day MAs. Only the semiconductor index is showing some backbone in this regard, although it's working off a MACD trigger 'sell'.

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The push from the April swing low (in the Nasdaq) was premature in breadth indicators had not reached oversold conditions, so it hasn't taken the long for breadth to again become overbought.  However, the recent similarities to March suggest this may prove nothing more than a pullback of the larger advance, although more downside is needed to at least take the heat out of the breadth indicators.  Ideally, a more substantial decline would push breadth indicators into a situation where a tradeable (buy) low would emerge, but this will take a while.

Despite missing a couple of days of action, the 'Bull Trap' which emerged in the S&P last week was still in play by today's close.  The two attempts at a rally in the past few days were rebuffed by the close: 1,687 is looking increasingly like a swing high top, and a good place to measure risk:reward if looking to go short.  The MACD has already triggered a 'sell'.