So, in one fell swoop, the S&P and Nasdaq undid all of the work of 2026 with nasty gaps lower. In the case of the Nasdaq, the ascending triangle breakout reversed into a breakdown with new 'sell' triggers in the MACD, On-Balance-Volume and +DI/-DI. The relative performance of the index to the Russell 2000 (IWM) showed an acceleration lower after last year's declines. Only stochastics (momentum) is holding on. If one was to be more honest of what's happening, we are likely broadening out to a trading range and it will take a loss of 22K to really flag a concern for bulls.

Things are a little more problematic for the S&P. There is a definite 'bull trap' in play following today's significant gap down. Volume rose in confirmed distribution, so this wasn't some fake out to get weak hands out of their positions. As with the Nasdaq, the twin lows of October/November at 6,550 carries greater significance, and we are still a long way from a test of the 200-day MA.

Even the equal weighted S&P wasn't able to escape the maelstrom. Its breakout isn't under threat, and there may even be a buying opportunity at the 20-day MA, but it will be feeling the pressure. Technicals remain net bullish.

The Russell 2000 (IWM) got off relatively unscathed. Yes, it took a hit on higher volume distribution, but technicals are net positive and it has room to move before testing support.

The trade I had thought was going to offer bulls something this week was Bitcoin. However, it tripped over to a 'bull trap', undercutting the 20-day and 50-day MAs in the process. The MACD and On-Balance-Volume also finished on 'sell' triggers.

The bullish start to 2026 has seen lead markets drift back into prior bases. The headline may be 'bearish', but the consequences are likely neutral with markets to drift sideways until buyers return.

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