Today can only be described as a classic collapse by bulls. Up until lunch it was plain sailing, but from the time I left work until now when I took a second look at the market, it was a total reversal. It really should have been set up for a breakout - if not today, then tomorrow - but this is looking more unlikely. The S&P tagged resistance, but failed to get beyond it. If there is a consolation for bulls it's that selling volume was light. Why the sell off hurt it hasn't broken support, and until then the breakout is still in play.

Bulls made good ground following yesterday's volume sell off. It was the first accumulation day in over a week and made up for Tuesday's sell off. The S&P scored a bullish piercing pattern, which honored converged 20-day and 50-day MAs. While it's a few days away from a breakout (at best), it does at least set up for a challenge of resistance by end of week.

In the tug-of-war between bulls and bears, bears were able to make a substantial pull in their favour with the Russell 2000 undercut of the 200-day MA. However, bulls aren't defeated yet as they still have 20-day and 50-day MA support to lean on as part of potential breakouts for the S&P and Dow, but their task has become a little more difficult after yesterday. The finish in the Russell 2000 looked ugly, as the close was equivalent to the low of the day. The index has also struggled to mount a challenge on its (overhead) 20-day MA; an area of attack for shorts.  The February swing low is still available for bulls to try and mount a defense, but demand will need to pick up sharply if it's to succeed.  The Russell 2000 is also suffering from a significant flight of participants, noted by the sharp relative swing away from the index towards Tech and Large Caps, since the end of April.

The only thing to disappoint bulls was the lack of volume, but the recovery from the Friday follow through was impressive. It still hasn't changed the larger picture, namely a 50:50 struggle between bears breaking the 200-day MA in the Russell 2000, and bulls looking for new all-time highs in the S&P/Dow Jones; the latter index in particular. The Russell 2000 is getting squeezed by the 20-day and 200-day MAs, which will break first? Shorts have been aggressive at the 20-day MA, bulls at the 200-day MA, who will win Tuesday?

A bright start to the day soon faded as the attempted breakout in the Dow stalled. Volume climbed to register distribution in the Dow, but the end-of-day point loss was relatively mild.  Monday offers a chance for a new breakout opportunity, but given Friday's reversal there may bearish follow through in morning trading. Look for a rebound from the 20-day MA.

It didn't happen. The Dow managed to keep itself pegged by resistance, but it didn't lose enough ground to suggest the breakout is no longer in play. It comes down to Friday, can it succeed?

It's probably down to the Dow to lead bulls out.  Other indices are too far back to make a difference, and the S&P isn't close enough to suggest it will do the lead out. Volume climbed to register accumulation, a good sign for bulls looking for more. The Dow managed a picture perfect 50-day MA, and now could be at an all-time high by the end of the week.