After last night’s analysis that the market suffered arrows to the limbs, but not a lethal blow, it dutifully rallied today.

But, the Transportation sector IYT, Regional Banks KRE, Biotechnology IBB, and Brick and Mortar Retail XRT all remain in caution phases.

As Grandpa Russell 2000 IWM returned above the 50-DMA and the bullish phase, we ask,

Was that the V-bottom we have enjoyed throughout most corrections, or a bear flag and the start of a much nastier downturn coming soon?

(Click on image to enlarge)

IWM cleared back over the 50-daily moving average or 163.81.

And although XRT KRE IBB and IYT could not clear their 50-DMAs, they all gained in price today.

Since we like to use the economic Modern Family and their phases to measure market breadth, today was good but not necessarily the “out of the woods” day bulls hope for.

So, going into midweek, watch to see if IWM holds above the 164 level and clears 165.40 next.

Otherwise, with 4 of the 6 family members in caution phases, assume that if IWM cannot hold, we could be looking at a move down to around 160 next.

S&P 500 (SPY) A weekly close under 320 will not look healthy. 329.50 resistance

Russell 2000 (IWM) Support between 163.80-164.07 to hold

Dow (DIA) 284.12 is the 50-DMA with 290.35 resistance

Nasdaq (QQQ) 212.24 support with 222 resistance.

KRE (Regional Banks) 54.00 is the 200-DMA. 56.55 resistance

SMH (Semiconductors) Major support 139.77. 145.65 resistance

IYT (Transportation) 190 next support. 195.50 resistance

IBB (Biotechnology) 115.40 support 119 resistance

XRT (Retail) 43 support and 45.00 resistance

Volatility Index (VXX) If 14.55 holds, then that could also mean more selling in store