Friday's Oval Office meltdown points to a future of nuclear proliferation. How markets react to this and the long-term prospects for the U.S. remain to be seen, but it's not 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 UK and Europe offer a plan that holds the stasis 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 on the daily time frame it managed to dig in its nails at support.
On a more positive note, the index was able to find support at the 50-week MA despite the close outside the rising channel.
The Nasdaq finished last 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 20,000.
The S&P 500 also enjoyed a significant bullish piercing pattern coming off a 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.
Other areas to watch are Nasdaq Breadth Metrics. The Percentage of Nasdaq Stocks Above Their 50-day MA has slipped to its low of 30%.
Nasdaq Bullish Percents have made a new swing low on net bearish technicals.
And the Nasdaq Summation Index is approaching the sixth month of its bearish divergence on net bearish divergences.
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 this 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.
Let's see what the week brings...