Russell 2000 Builds Breakout Base as S&P 500, Nasdaq Approach Local Top

investing.com:

Another solid day on Friday for indexes with the Russell 2000 (IWM) building up some nice momentum, but other indexes did not disappoint.

The Russell 2000 ($IWM) added over 1% as it reached resistance of the January swing high. Volume climbed to register a second day of accumulation in a row, increasing the probability of a breakout.

Technicals returned net bullish with new 'buy' triggers in the MACD and On-Balance-Volume. This technical improvement coincided with a bounce from the intermediate stochastic midline, a typical bounce point in a cyclical bull market.

While Monday may not deliver another gain, I would be looking for an end-of-day close near resistance.

Both the Nasdaq and S&P 500 had finished Thursday with narrow range doji that at this stage of an advance frequently mark a top but this was not the case by close of business Friday as both indexes were able to post gains.

The Nasdaq currently sits 15.7% above its 200-day MA, which puts it above the 85% of historic price action for this index dating back to 1971, increasing the probability that a major top is not far away.

We may be looking at a double top for this index, even if the index has just edged itself beyond the last peak in a potential bull market breakout. If this proves to be the case, then it will register as a 'bull trap'.

The S&P 500 is 12.6% above its 200-day MA, which is in the 90% zone of historic extreme price action dating back to 1950.

This index has already surpassed the point where it could mark a double top, so if there is a top here then I would be looking for a sequence of higher highs and higher lows in a pullback to the low 4000s.

Whereas I believed the break of 4,766 marked an end of the bear market and would not undercut this