One step back - one step forward. The S&P made back most of yesterday's losses on slightly lighter volume than the previous day's distribution selling. The breakout has yet to occur but today's gain keeps that possibility intact. 

With the week behind us the S&P stood poised to break to new highs for the recovery rally,  following the lead of the Nasdaq which is already posting new multi-year highs. The Russell 2000 is looking a little more tentative as it remains below its 200-day MA on bearish MACD, ADX and relative performance.

The Nasdaq has been leading indices throughout 2020, even the sell-off caused by Covid19 was not as bad as was inflicted on the Russell 2000 or S&P. The latest gains are challenging the most recent swing high which was marked by a "gravestone doji" in addition to building on the break of 10,000. On-Balance-Volume is leading the indicators with a strong accumulation trend. 

Sellers had managed to push indices back to support levels where buyers are looking to make a stand.   The S&P is down at the June swing low which is also the 50-day MA. Technicals are a mix of bullish and bearish signals; the index is still underperforming against Small Caps. Selling volume in recent weeks has sided heavily with bears but On-Balance-Volume hasn't yet switched to a 'sell' trigger.  This is as good as place as any to stage a bounce and take on a low risk trade. 

The week ended for markets with sellers in control. The damage was sufficient to put markets on warning for a bearish reversal - but the last such attempt in early June was quickly reversed by buyers; will this time be different? The Nasdaq lost its breakout with a drop below 10,000 and support of 9,800. Part of this move also undercut its 20-day MA. Volume rose in confirmed distribution in one of the heaviest trading days of the year not attributable to options expiration. An effective flat-lined MACD switched to a 'sell' trigger, so this is vulnerable to whipsaw as other technicals remain firmly bullish. 

The Nasdaq had been the lead index as it posted new all-time (post-Covid19) highs, but today's selling followed yesterday's bearish gravestone doji; collectively, it looks like a bearish evening star. The only thing remaining is breakout support, which has yet to be violated. Selling volume was down on yesterday's buying so it wasn't all in bears favor.

Traders had a weekend to stew over Friday's losses and a weak open on global markets could have set a more negative tone. However, this proved not to be the case.  The S&P staged a small rally from its 20-day MA. The rally hasn't yet undone the 'sell' trigger in the MACD but the sequence over the last five days has mapped a consolidation handle which has the potential to challenge and get past 3,200.