Friday saw indices take another hit lower, but most of the damage was done at the open (with gaps lower) and by end of day, the S&P and Nasdaq finished with small doji, rather than any more catastrophic candlesticks.

Freepik

The Nasdaq is still close enough to key breakout support that a rally on Monday could see this support regained and a 'bear trap' established. It will have to be the next one or two trading sessions for this to be confirmed.  Any further loss now would instead open up a test of the 50-day MA, and potentially, a move back to 10,600s. Futures are looking good for a bounce, so let's see what the day brings.

The S&P had long since given up breakout support and is well inside its prior trading range.  Having said that, it has been a slow-and-steady for the index, with well-defined "step" ranges to keep the broader rally intact.  The index not finds itself back at its 200-day MA, a source of resistance in December and early January, but now has a chance to play as support. Better still, selling volume hasn't registered as distribution and intermediate stochastics [39,1] sit at the mid-line, a typical starting point for bounces in bullish markets. I like the trade potential here. 

The Russell 2000 is caught a little in two minds.  It has the strongest technical picture, and continues to outperform the Nasdaq and S&P, but Friday's close just below breakout support does give bulls a little work to do for it to regain confidence.  It has a 50-day MA to lean on at $184 ($IWM) and it might do so today. 

Permabears will likely be looking at the Dow Jones Industrial Average.  After a trail blazing move in the latter part of 2022 to potentially drive new all-time highs, it has since stumbled backwards.  We have a big fight coming around 32,500 which is also near its 200-day MA.  Lose this support, and the index will be staring at a move down to 30,000. 

So, for today's session, track index action near 200-day MAs (50-day MA in Russell 2000).  I still think we have reached a base low, and that higher prices are ahead, but this "base low" could last another few weeks with further sideways action. 

More By This Author:

Markets Hold Breakout Support, Limited Room For Maneuver
'Bull Flag' Breakouts Hit A Road Block
Nasdaq, S&P And Russell 2000 All Shape 'Bull' Flags