We can see that the volatility is starting to pick up which is synonymous with market changes and volatile moves to come in the upcoming days to months.  See the charts that follow to see how this may be playing out.
 




The Russell 2000 Small Cap Index has already been hit hard. It failed to reach its former highs as noted by the red horizontal line. Then it broke a short term green trend line. It had a big red candle downward today. The RSI and MACD are both turning lower.


 


Next we look at the Nasdaq. It’s right at a crucial point. It’s either going to double top or push through to a great rally. With the poor economic data that’s been pouring in, it would be hard to see how the rally could continue. Everything from housing to manufacturing has been hit hard lately. Economists are already calling for a slower GDP growth in 2007. If they are correct this means the economy will slow. The economy slows when consumers can’t/won’t spend as much and when corporate earnings can’t grow that well. When this happens, stock prices fall due to a lack of earnings momentum and lack of confidence in the national economy at that point.
 




While the Dow has held up the best, it’s also the one that’s the most extended. This Index has had very few down days in this rally. It’s starting to get very extended from major moving averages which means buying gets more risky all the time. The RSI and MACD have turned lower on this chart as in the others as well.


 


While the last chart only comprised 30 companies in America, the S & P 500 represents the largest 500 publicly traded companies in America. This one has also had a big red down candle today. RSI is falling at a sharp angle while the MACD turns lower. This index is also well away from its major moving averages also. These are all things that should bring caution to the trader. Keep an eye on these conditions to see if they worsen.