A good end-of-week finish for markets offered positive tests of support to head into next week with. The Russell 2000 tagged breakout support defined by November's swing high and 20-day MA. Volume steadily declined off the reversal from the $199 high - another positive - although the MCD trigger 'sell' was a little disappointing.

The December rally, which was looking vulnerable as of Monday, managed to resume its trend before giving back some of those gains today.  I'm still looking for a larger move back to retest breakout support, which may start as of today, but today's selling volume was well below recent buying - so the percentage loss looked worse than it actually was. The Nasdaq loss did little damage to the technicals and relative performance continues to surge. The 20-day MA is crossing above the 200-day MA, so the 20-day MA is likely to be the first area of potential support to be tested should the current selling continues. 

It could have been worse, the potential for losses was quite high but markets were reluctant to give in to sellers, many markets finished where they started. The Nasdaq was a case in point. Selling volume was lighter than Friday's as the index closed the breakout gap from last Wednesday (an intraday chart will show this better).  This should give swing traders an opportunity to trade the next move - using the high/lows of today to determine the entry point and risk (buy break of high - stop on loss of low / short loss of low - stop on break of high).  Technicals favor bulls, so the long trade is more likely to succeed. 

Friday delivered a small riposte to Thursday's big gains, but this rally from December lows needs a larger consolidation to help digest those gains.  There is solid support established by breakouts and the moving averages, so if things stall out here I wouldn't be too worried; only if we lose all the moving averages (which would also take out breakout support), that a recovery would take longer than just a few weeks.  The Nasdaq is the market leader with net bullish technicals. If Friday's losses were the start of something more, then a retest of 11,500 would be very welcome, and a spike low below 11,500 even better.  The 50-day MA would also offer a good test to wash out weak hands.

Buyers returned after the brief visit of potential `bull traps` across indices.  Yesterday's action delivered the breakouts and today's was the icing on the cake.  The one index which did break today was the S&P.  The S&P breakout followed two days of buying on higher volume accumulation.  The concern is the expanding relative underperformance to peer indices, but the chart breakout looks good and support at 4,000 should be good for measuring risk:reward.  There is also going to be a "golden cross" between 50-day and 200-day MAs over the next couple of days. 

What goes up may come down, or at least, the nascent breakouts in the Nasdaq and Russell 2000 now find themselves on the wrong side of support. It hasn't been a total collapse, selling volume was down on Friday's buying, and the potential for a recovery is quite high.  But for this to happen, sellers can't be allowed to build up any momentum.  As things stand, the Nasdaq and Russell 2000 now find themselves back inside the prior consolidation. The Russell 2000 is underpeforming the Nasdaq, so it's the most vulnerable to further selling.  Even if the 'bull trap' is confirmed, I would still look for the potential of the 20-day MA to play as support.

Friday was a clear victory for the Nasdaq with a breakout to go along with higher volume accumulation and a close above the 200-day MA.  Nasdaq technicals retained their net positivity and it will take a sharp loss Monday or Tuesday to undo this positivity.  Step-by-step, this nascent cyclical bull market grows in strength.