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Since returning from holidays it has been a straight forward series of gains for markets. The index that had made the most progress is the Dow Jones Industrial Average ($INDU). Today's action had suggested a potential breakout, but it got pegged back by the close with the Dow finishing on an inverse hammer at resistance. The Dow Jones Industrial Index has taken a leadership role, so it will be interesting to see how the index plays out over the coming days. My expectation is for losses, but technicals are net bullish and haven't really show a strong bearish divergence to suggest a reversal is coming; a break of today's lows would suggest a double top and further downside expected.

The Russell 2000 (IWM) is looking more uncertain. Today, it finished with a bearish 'black' candlestick below resistance. Such candles often lead to losses, so I will be keeping an close eye on this. On the technical front, the MACD histogram is offering a possible bearish divergence with stochastics having crossed the bullish mid-line. Volume is also siding with bulls. For tomorrow, I would give the candlestick priority and look for lower prices.

The S&P is knocking around just below breakout resistance. Unlike the Russell 2000, recent volume has been tepid, but with prices holding gains without the price extension seen in the Russell 2000, suggests the index could hang on. If the Dow Jones is able to hold its breakout, then the S&P could offer itself as the "value" play.

The Nasdaq is in a similar situation to the S&P with a tight period of trading that gives the edge to bulls, particularly with the index resting on 50-day MA support. Traders could benefit from buying without changing the larger picture; is the July peak a "top", or just a swing high in a larger bullish trend? It will likely take a few more days before we know for certain.

So, for tomorrow, look for a lead in the Dow Industrials. Consumer confidence data might be the catalyst to get things moving. If it looks like the Dow is to hold today's lows, then the S&P or Nasdaq might offer more breathing space for a long trade.

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