Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

An October Low Retest Is In Effect And The Russell 2000 Still Holds The Best Hand

Published 11/04/2022, 04:00 AM
Updated 07/09/2023, 06:31 AM

In the end, it was 200-day MA resistance for the Russell 2000, and the October swing high of 11,200 in the Nasdaq, which proved to be the step-too-far for the rally in the indices. In all cases, indices are now moving back to the point rallies started in October. 

In the case of the S&P, the rally managed to close above the 50-day MA before sellers kicked it back from whence it came. Currently, it's leaning on the 20-day MA with a non-too convincing - neutral - 'spinning top' candlestick. Momentum is a long way from oversold (and stochastics [39,1] turned from the midline - a typical reversal in a bear market), so it's hard to see yesterday's trading at a point where you can be a buyer.

SPX Daily Chart

The Nasdaq has retraced back to former channel resistance, turned support. Relative performance has skewed sharply away from the S&P and Russell 2000. The MACD is holding on to its 'buy' trigger, but other technicals are bearish. However, unlike the S&P, yesterday's action could be viewed as a buying opportunity, but a close below channel resistance (price support) would negate the signal.

COMPQ Daily Chart

The Russell 2000 made a picture perfect reversal from its 200-day MA with the 'black' candlestick. Yesterday's `spinning top` candlestick is holding support for both its 20-day and 50-day MA, and the last two swing high in October, so there is an opportunity for buyers to step in and defend the $176 level. Technicals remain net bullish and have the potential to remain so if buyers can make an appearance today (the ADX will likely turn bearish if not). 

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

IWM Daily Chart

With indices effectively finishing yesterday with neutral candlesticks there is a strong chance we will see a continuation of the selling today. The S&P is looking the most vulnerable, but even the Russell 2000 will struggle if it's unable to attract buyers after the first half-hour of trading today. 

Latest comments

We'll see. Next meeting will be a 50 and first good cpi or pce will spark a rally
The Fed won't stop...until the moment it does and turns on a dime. The market is forecasting months out, so I think we're getting ready to turn the ship around, regardless of technicals. Which of course these events are what break technicals and trends. Otherwise markets would be easy and mathematical to predict. I like reading about the technicals though, good article
interesting.   futures are up at the moment.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.