Yesterday,the S&P 500 ETF ($SPY) undercut support of its two-day low and 50-day moving average before closing with a bullish reversal candle. Wednesday's reversal was the second bullish reversal candle in the past two weeks. If Wednesday's low does not hold up through the end of the week, then the price action could turn ugly:



Nasdaq 100 ETF ($QQQ) reversed just above the last reversal candle low at $85. A break of the $85 support level would not be pretty and most likely lead to a test of the 200-day MA:



Russell 2000 ETF ($IWM) formed a bullish reversal candle after undercutting the prior swing low on 4/15, closing just below the 200-day MA. Wednesday's reversal in $IWM could lead to a short-term bounce to the 20-day EMA.

The Midcap S&P 400 has formed a constructive basing pattern and could possibly recapture the 50-day MA next week.

With the S&P 500 and Dow in solid shape, if the S&P 400 and Nasdaq can reclaim the 50-day MA next week, then the market might be able build enough momentum to stage a decent rally.

Guggenheim Water Index ($CGW) looks great on the daily chart, as it has been tightening up the past three weeks while holding the rising 50-day MA. This week's action is very tight and could possibly lead to a breakout next week:



Based on the tight consolidation of the past few weeks, we have added $CGW to today's watchlist as a potential swing trade buy entry.

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.