Small cap stocks may be ready to bounce soon as the Russell 2000 ETF ($IWM) held support at the 200-day MA for the third time in a few weeks.

Wednesday's action was the second reversal off the intraday lows this week, and a move above Wednesday's high could potentially spark a short-term rally to the prior swing high around $1,150:



Despite the ugly selling action in the Nasdaq and leadership stocks, the S&P 500 is sitting less than 1.0% off the prior swing high and could potentially break out to new highs this week.

A breakout in the S&P 500 could breathe some life into the Nasdaq 100 along with the recent action in $AAPL; however, the big question is how will the Nasdaq 100 react at the 50-day MA, which is less than 1.0% away (if it rallies).

Sprott Physical Platinum and Palladium Trust ($SPPP) continues to build a bullish base above the rising 50-day MA. The moving averages are all in order with the 20-day EMA above the 50-day MA, and the 50-day MA finally pulling away from the 200-day MA.

If the price action can set a higher swing low this week, then a breakout above the downtrend line could serve as a secondary entry point for those who are not already long:

 

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.