Things are looking good for the NASDAQ as technicals return net bullish after a brief period of bearishness. This coincided with the index nestled against resistance, helped by Friday's tight intraday action. The index is nicely placed for a breakout later today, Monday, especially given the relative out-performance of the NASDAQ against its peers.
As with the NASDAQ, the NASDAQ 100 also sits on the verge of a breakout, but unlike the aforementioned index its technicals are not yet net bullish.
The S&P lost a little ground on Friday, but it remains within a downward channel which has the characteristics of a 'bull flag'. While all technicals are still 'net bearish', the MACD is very close to a new 'buy' signal.
An upside break would also take out the 50-day MA. However, with the relative performance of the index taking a nosedive against Small Caps and Tech indices, the easier option may be to take a short trade with a stop above the 50-day MA.
The Russell 2000 is morphing from a potentially bearish ascending triangle to a bullish 'bull flag'. Action from Thursday and Friday looks like a breakout of the 'bull flag'.
Technicals have also turned net bullish with relative performance improving against the NASDAQ. The safest risk:reward is for longs to trade using a stop on a loss of 1,340; a stop on a loss of Friday's low would have a high risk for whipsaw, but is an alternative play for those seeking a tighter risk:reward.
For today, longs have the better opportunities with the NASDAQ, NASDAQ 100 and Russell 2000. However, if there is a weak start or markets fade after the opening half hour, then the S&P could offer itself as a quick return short play (down to channel support).