Second day of selling for the Russell 2000

Friday's selling in the Russell 2000 ($IWM) added to Thurday's down day, and volume rose in confirmed distribution.  This built on the Wednesday doji and its reversal potential at the end of a rally.  Despite this, technicals remain net positive.  There is of little real concern until we see a test of breakout support around $189 and/or the 20-day MA (which is close to $189).

The Nasdaq is also easing back to breakout support along with the fast rising 20-day MA. Unlike the Russell 2000 there is creeping bearishness in the technicals with a MACD trigger 'sell'. In addition, the Nasdaq has moved to a period of underperformance relative to the S&P. There is still plenty of room before support is tested, but it's likely to do so before the other indices.


The S&P held up the best on Friday, but the 'black' candlestick is not ideal.  However, because the volume was up it will record itself as accumulation.  The S&P is outperforming the Nasdaq, but underperforming against the Russell 2000.  Given that, I think attention will shift to the other indices and the S&P will just tick along.

If there is an index holding the others back, then the Russell 2000 ($IWM) is the one to watch. The long standing base on the weekly chart, dating back to early 2022, is ready to clear $198 and kick start the formation of a right-hand-side base.  When this happens it will provide a slingshot for the other indices to continue their rallies. 


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Investments are held in a pension fund on a buy-and-hold strategy.

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