Editor's Note:

Investors may want to take a more cautious approach to the market. A few of the market's major indices are flashing potential warning signals.

The NASDAQ composite's trend is higher but on a short-term basis it is retreating from a trend line of resistance.

NASDAQ chart:

The small cap Russell 2000 index looks vulnerable. It has broken below its trend line of higher lows and is now flirting with a potential breakdown below technical support at its 50-dma. If the Russell ends the week at current levels it would generate a bearish engulfing candlestick reversal pattern on its weekly chart.

Russell 2000 chart:

I'm also worried about the Dow Jones Transportation Average. The bounce appears to be failing. The last four weeks is starting to look like a bear-flag consolidation pattern. If crude oil continues to rise it could be the spark that sends the transports lower.

Transportation average chart:

We are not adding any new trades to the Premier Investor newsletter tonight. It's time to be patient. Will the small caps drag the rest of the market lower or will the big caps catch a second wind and lift the rest of the market higher?