There wasn't a whole lot of change from my last post. The Russell 2000 (IWM) is holding just above its 200-day MA, but has been curtailed by its 20-day MA; this squeeze will have to resolve eventually, but the likelihood for a breakdown is higher because of the weak technical picture.

The Nasdaq is pinned by its 50-day MA but is trading well above its 200-day MA. However, it's the selling from the peak at the end of August that is dominating current trading. I would be looking for a retest of 13,161 swing low, and if that fails, then a move down to its 200-day MA. One key aspect in its favor is that the technical picture is surprisingly resilient, so despite today's loss there is still an opportunity for the 20-day MA to be the launch point for a renewed attack on its 50-day MA.

The S&P is trading below its 50-day MA with a more mixed technical picture than the Nasdaq. I would view this as a status quo play (i.e. "hold") with a test of the August swing low the most likely outcome in the coming weeks.

In closing, bulls will wan to see a re-establishment of moving average support for the Nasdaq and S&P, with the Russell 2000 ($IWM) continuing to hold above its 200-day MA. Given the technical picture, however, we are more likely to see a break of this 200-day MA for Small Caps, that will drag the other indices down low with it.

More By This Author:

The S&P And Nasdaq Are Rebuffed At 50-Day Moving Averages, But Russell Has Potential
Russell 2000 Coming Up To Test Of 200-Day MA
Selling In Russell 2000 Undercuts Breakout Support