Image source: Pixabay

Friday's Oval Office meltdown points to a future of nuclear proliferation. How markets react to this, as well as the long-term prospects for the U.S., remain to be seen, but it would not be good for either nation if the impasse continues.

Will China step in and offer a deal to Ukraine in exchange for security? Will Russia eventually take it all in the absence of U.S. military aid? Can the UK and Europe offer a plan that holds the status quo until European forces are in a position to resist? Markets may not react at all, but sellers are in a position to advance their position off the back of this uncertainty.

The Russell 2000 (IWM) broke below support of the rising channel on the weekly time frame; although it managed to dig in its nails at support on the daily time frame. On a more positive note, the index was able to find support at the 50-week MA despite the close outside the rising channel.

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The Nasdaq finished the week with a bullish piercing pattern following a successful test of the 200-day MA on higher volume accumulation. While this may be good enough for a rally to mount a challenge of its 50-day and/or 20-day MA, it will be a bigger challenge to get past the 20,000 mark.

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The S&P 500 also enjoyed a significant bullish piercing pattern coming off of mid-level support. The index has come close to retracing the entire trading range following the February 'bull trap.' On the flip-side, technicals are net bearish.

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Other areas to watch include the Nasdaq's breadth metrics. The percentage of Nasdaq stocks above their 50-day MA has slipped to its low of 30%.

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Nasdaq bullish percents have made a new swing low on net bearish technicals.

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And the Nasdaq Summation Index is approaching the sixth month of its bearish divergence on net bearish divergences.

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None of these breadth metrics are good news for the Nasdaq in the long-term, and we are long overdue for a move below its 200-day MA despite Friday's successful test.

The one potential bright spot for next week could be the Dow Industrial Average. There was a large bullish engulfing pattern that returned the index above the 50-day MA on higher volume accumulation.

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Let's see what the week brings.

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