The picture perfect bounce off 50-day MAs is now encountering the reality of doubtful stock holders. The Russell 2000 (IWM) is important in this regard because Small Caps drive market leadership, and we are not seeing this as relative performance to peer indices continues to deterioriate.

The Russell 2000 has returned to a net bearish technical picture, but more importantly, the index has broken the bullish rising trendline. It hasn't yet undercut the lows of the trendline test, but today's solid red candlestick on confirmed distribution is one opening up for a test of the 200-day MA.

The S&P delivered on yesterday's bearish 'black' candlestick. Today's loss brings it once again into a test of its 50-day MA, but like any test of key moving averages, you don't want to see a repeat test so soon after its first. Technicals are mixed; on-balance-volume is trending higher and is still very strong, and relative strength is moving in its favor against the Nasdaq, but it's price action that is driving this.

The Nasdaq also registered as distribution day as it tagged its 50-day MA for a second time in a week. This is not bullish action, and the bullish 'hammer' from the initial test of the 50-day MA is going to come under threat. Technicals evolved with a 'sell' in On-Balance-Volume, leaving only Slow Stochastics [39,1] in bullish territory. Don't expect this to hold out for long.

The real damage was done in Bitcoin. Today's finish brought it into the triple spike low on higher volume distribution on net bearish technicals. Given the cryptocurrency is swimming below its 200-day MA with an upcoming 'Death Cross' between 50-day and 200-day MAs, it's likely to head lower.

Semiconductors SOX are back trading at October highs on a similar bearish follow through off a prior day's 'black' candlestick. It hasn't tested its 50-day MA yet (like other indices), but will likely do so now.

It looks like markets are staging a failed test of all-timed highs, but until the positive tests of 50-day MAs are undercut, we are looking at potential trading ranges and neutral action at best/worst. Despite that, we are still trading near market extremes relative to 200-day MAs, so I would like to see further losses to better position markets for a more sustainable rally in the future.

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