Markets experienced modest losses, but there is still underlying strength in the market.  The Nasdaq is primed to break to a new swing high, helped by the relatively light volume associated with today's selling as it knocks on the door for a close above 12,200. Technicals remain net bullish, although the index did lose some relative performance against the S&P.  However, Rate Of Change is the highest it has been for months, another indication of bullish strength and the likelihood of a breakout in the coming days.

Friday was a great day for longs with all indices recording gains on higher volume accumulation. The Nasdaq is outperforming both the S&P and Russell 2000 and with smell of recession in the air this index is performing remarkably well.  Technicals are net bullish.  I want to find something bad to say about the index, but at this point in time. there is little negative to say. 

Buyers were able to drive gaps higher at the open, but couldn't build on the initial gains. The Nasdaq managed to make a new swing high for the March rally, but it could take a while before the February highs are challenged.  Technicals are net bullish, and more importantly, the index is outperforming the S&P.  It looks like risk can be measured against the 50-day MA.

It's getting a little dangerous for the growth stock index.  The Russell 2000 ($IWM) is experiencing an ever decreasing series of individual highs as it looks to defend December lows.  Technicals are net bearish, but there is a chance for a 'weak' buy below the bullish zero line.  Trading volume is a little light, but really, I want to see a solid white candlestick rather than the two indecisive candlesticks over the last couple of days, particularly as Friday's 'bullish' piercing pattern had promised more.  The March consolidation is not the best if you are of bullih persuasion. 

"Hope" is a bad word in trading, but markets are holding up better than I expected.  The Russell 2000 is the index to watch because of the import of growth stocks to secular bull markets, but also because it's the index closest to crashing.  Friday was an important day for the Russell 2000, as the index started with a gap down.  There was significant risk of a collapse, but buyers stepped in and managed to deliver a close above support.  This is key, because Small Caps closed above support as defined by candlestick real bodies. Buying volume was a little light, so no accumulation, but I would be okay if at some point in the coming week we did see some accumulation.  Technicals are net negative, and while Friday's price gain was good, there was no improvement in supporting technicals. 

Monday's action had looked to provide some security for bulls, but then bears came in with gusto and closed the day with bearish engulfing patterns for the Nasdaq and S&P, and a big red candlestick for the Russell 2000.  The Russell 2000 experienced the biggest sell off of lead indices. The substantial red candlestick came with higher volume distribution, at a time when it looked like the selling was done.  The index continued with its underperformance to the Nasdaq and S&P, so it looks like crash watch is back on.

Friday was a sticky finish for markets, Monday managed to make back some of this lost ground, and today delivered a breakout in the S&P. I had talked over the weekend about the risk of a crash, particularly in the Russell 2000, but today's action in the S&P goes some way to averting this scenario.  The Russell 2000 is still in trouble, but there is reason for optimism in the S&P.  The gap move above resistance came with a new 'buy' trigger in the MACD, although other technicals remain bearish.