Headlines may have suggested otherwise for markets, but Small Caps had a rough day. The Russell 2000 lost over 1% in a slice through both 50-day and 200-day MAs. It's ugly because Small Caps have to re-establish a new price channel and each daily loss makes this new channel less and less bullish. Technicals are not net bearish, but they are not looking good either.

The Nasdaq undercut the trading range it was attempting to shape, breaking through its 20-day MA in the process. Volume rose to register a distribution day. Watch how the next bounce plays out; a failure to regain the trading range would mark aggressive action on the part of shorts.

Yesterday, I pointed to the long term bearish trend in Nasdaq breadth. Today, there is a developing bearish divergence in the same breadth metrics.  For example, note the marked difference in the Nasdaq Bullish Percents: the same situation can be found in the Percentage of Nasdaq Stocks above the 50-day MA and Summation Index.

But if you only looked at the S&P, you would have thought little happened today.

For tomorrow, watch how any bullish reaction in the Russell 2000 and Nasdaq reacts against today's breakdowns.