It was not meant to be, for what had been a relatively orderly bounce from May lows. Friday's trading drove the nail into the coffin of the 2-week long bull flags with a 'gap-and-run' lower, which now puts the May lows under pressure.
If bulls are to get out of this with the prospects of a double bottom, then today or tomorrow has to see a spike low—preferably one with a wide intraday range—which capitulates the last of the weak hands.
But if we see another day like Friday, then it's back to the drawing board as to looking for a bottom.
For the NASDAQ, we have the May spike low of 11,035, but really, it's the candlestick real body support of 11,152 which has to hold on a closing price basis—spike lows below this are fine (and are to be welcomed).
We have technical pressure with the uptick in bearish trend strength, the relative 'sell' trigger against the S&P, the 'sell' signal in On-Balance-Volume, and a weak 'buy' signal in the MACD which is close to reversing to a strong 'sell' (when the MACD line is below the zero line it's a weak 'buy' and strong 'sell;' vice versa in the reverse scenario).
The S&P is already at its real-body support of 3,887. Note how Stochastics (39,1) never made it above the mid-line, confirming a bear market rally (when this metric is below 50 we have a cyclical bear market, and a cyclical bull market when above 50). The index also sits on the verge of a new strong 'sell' signal in the MACD.
There is a silver lining for markets and there will be few singing its praises, but the Russell 2000 (IWM) continues to perform well (relatively).
Yes, it couldn't avoid the selling of Thursday and Friday, but it did manage a brief cross of the 50-midline in Stochastics (cyclical bull market territory) and its MACD is close to returning above the bullish zero line.
It has continually outperformed peer indices since the start of April—with that relative performance accelerating over the last couple of days. This is an investors set-up; growth stocks is where the stealth buying is happening and markets are trying to keep this a secret.
The end-of-week market headlines look bad for Monday, but the Russell 2000 (IWM) was quietly doing better than the S&P and NASDAQ. Take note, this is not a market to be selling— particularly for growth stocks which are (or are on the verge of) outperforming the Russell 2000.