After an extended period of relative outperformance by the Russell 2000 against the Nasdaq, the Russell 2000 has begun a period of underperformance with supporting technicals bearish. The failure to recover the 50-day MA along with the downtrending 200-day MA compounds the bearish picture.
The Nasdaq remains below the 20-day, 50-day, 200-day MAs on net bearish technicals. So while it may be outperforming against the Russell 2000, it's not doing so from a position of strength. However, the silver lining for the index is the building swing low in the Semiconductor Index.
For tomorrow, bulls should look for a bounce opportunity off neckline support in the S&P, and the potential for a rally through converged support in the Nasdaq; the latter would likely see a swathe of short covering given the negative technical picture. The Russell 2000 is not offering a clear risk:reward trade.
You've now read my opinion, next read Douglas' and Jani's.
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Dr. Declan Fallon is the Senior Market Technician for ChartDNA.com, and Product Development Manager for FirstDerivatives.com. I also trade on eToro and can be copied for free.