Markets are breaking two ways - Small Caps heading south while Tech and Large Caps head north, but even Small Caps have reason for optimism.
The Russell 2000 (IWM) bounced off its 200-day MA, reaching its 20-day MA until today's reversal dragged it back with a bearish engulfing pattern. Despite the bearish candlestick, the MACD still managed a 'buy' trigger, and selling volume was light. I would be looking for a bullish test and buyers to step in. Momentum is slowly improving, so I'll be watching for bullish divergence in technicals.
The equal-weighted S&P made it back to channel resistance and its 20-day MA. Like the Russell 2000, it saw a new MACD trigger 'buy'. While I marked this as a possible shorting opportunity at resistance (stop on break of today's high), if it starts the day brightly, it could post a nice breakout.
The S&P marked its own interest with a break of 7.8K resistance that was enough to negate the August 'bull trap'. The inverse hammer has the potential to become a bearish 'evening star' - an opening gap down would go a long way towards reaching that goal (creating a new 'bull trap' in the process). But if we see a close into today's spike high, I would have far greater confidence in this breakout succeeding. Technicals are net bullish, and I liked how stochastics bounced off the mid-line (a bull market retracement).
The Nasdaq posted a cleaner breakout on Monday before it flashed today's indecisive doji. Technicals are net bullish. Today's volume was lighter, but yesterday's volume registered as accumulation.
Bitcoin (BTC.X) was primed to follow through on the confirmed test of the $82.5K breakout, but the past two days may be setting up a short play - or at least a move to take out stops. A rapid intraday move back to $82.5K may actually offer GTC buy orders a chance to take advantage of the stop-knockout. Alternatively, shorts may get a 1-2 day play - covering on the $82.5K test.
The next mover-and-shaker could be the equal-weighted Nasdaq 100 ETF (QQEW). It's on course to challenge $167.50 and generate a breakout. Volume registered as accumulation and technicals are net bullish. Today's 'black' candlestick is bearish, so watch for a move back into yesterday's white candlestick, but I suspect this move will only be temporary.
For tomorrow, watch action at resistance. The 'easy' option is to reverse at resistance, but breakouts could feed into each other. The most likely shorting opportunity is Bitcoin, but only for a quick trade, and not if there is a gap higher at the open.
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