Russell 2000 ($IWM) lead indices rally

The Russell 2000 ($IWM) has been guiding towards this, but the positive reaction in the Nasdaq and S&P following Friday's gains in the Small Caps index is not enough to suggest a swing low is in place for these indices. For starters, buying volume was light and momentum remained firmly oversold. The S&P did offer an opportunity at the 50% Fib retracement, and Fib zones give the best indication the decline has found a sustainable low, or at the very least, not one prone to further panic selling.

Russell 2000 ($IWM) again keeps up the fight for bulls seeking a low

The divergence in the action between the Russell 2000 ($IWM), and the S&P and Nasdaq continues. If the Russell 2000 could go on to tag its 200-day MA, particularly if it's done on a bullish reversal candlestick, then there would be a good trade opportunity on offer here. Even a rally from here might be enough if there is a tight stop.

Russell 2000 ($IWM) resists extending losses as crash conditions reached.

While it wasn't the recovery I would have liked, the Russell 2000 ($IWM) managed to resist extending its losses. The index did record a loss, and volume was confirmed as distribution, but I would be a little more optimistic going forward; albeit, a test of the 200-day MA remains favored.

Fifty-day MAs offer little support as indices seek swing lows

Monday's selling left no doubt as to who's in control of markets. The real disappointment was how little the 50-day MA played as support given how long ago it was last tested. Instead, we are are left looking at alternative support levels for buyers to step in. The S&P moved to a net bearish technical picture after months of been net bullish. It's unclear where support may come in so I have included Fibonacci retracements as a guide. Interestingly, today's narrow range day occurred at the 61.8% retracement line, so we may see some bounce (likely, not much) tomorrow. The 38.2% zone is also near a January peak (and successful support test in February), so if there is no bounce tomorrow, then the 38.2% zone is likely next.

Apple Comes In From The Cold

Introduction It will take a few days for markets to digest recent economic news, but it was clear before any announcements were made this week that the rally from October lows had stalled, and markets have now entered a new phase.  The S&P had broken its upward trend on the early week releases of CPI data and FOMC Meeting Notes, but had managed to rally back on positive news from Apple and Amazon. And while the S&P enters a tug-of-war period between bulls and bears, its still 10% above last summer's peak, and 25% above the lows of last October. A breakdown doesn’t necessarily mean a bear market is about to begin, it could simply be the slowing of its prior advance, and more likely, the start of a sideways shift in the market. Image: S&P long-term chart Investors will always fear the crash, but one only has to look at a long term chart of an index to see how these declines have ultimately just been pauses as part of a longer advance.  Image: Google Financ

Weekly charts of S&P and Nasdaq are only starting to breakdown

I'll cover daily charts during the week, but I wanted to look at the weekly picture. Friday was an ugly day on daily timeframes, but weekly charts are holding up well. The Nasdaq is the in the early stage of a rolling top, but I would be looking to the 20-week MA to attract buyers, although in August 2023 this moving average only offered brief support befoer it was breached.

Nasdaq accelerates higher with sharp jump in relative performance

Today belonged to the Nasdaq with Apple and Amazon key contributors to these gains. The index is now challenging the 'bull trap' after recent struggles. Again, we are likely looking at sideways action, but if there is follow through over the coming days it will mark a confirmed follow through for the index.


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