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U.S. Indexes Form Bases: Is it Time to Accumulate?

By Declan FallonStock MarketsMar 31, 2023 04:07AM ET

www.investing.com/analysis/us-indexes-form-bases-is-it-time-to-accumulate-200636788

U.S. Indexes Form Bases: Is it Time to Accumulate?

By Declan Fallon | Mar 31, 2023 04:07AM ET

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US500

+1.45%

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US2000

+3.56%

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IWM

+3.63%

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IXIC

+1.07%

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Buyers were able to drive gaps higher at the open but couldn't build on the initial gains. The Nasdaq managed to make a new swing high for the March rally, but it could take a while before the February highs are challenged.

Technicals are net bullish, and more importantly, the index is outperforming the S&P 500. It looks like risk can be measured against the 50-day MA.

COMPQ Daily Chart

COMPQ Daily Chart

The S&P 500 is in the process of challenging the March swing high and is holding on to its 50-day MA. Technicals, like the Nasdaq, are net bullish. Since early March, the S&P 500 has accelerated sharply against the Russell 2000.

Having attracted buyers, it now has the opportunity to build on that, take out the March high, and challenge the February high. If you are looking for a support area to measure risk against (for a long position), the 200-day MA looks like a good place to start.

COMPQ Daily Chart

COMPQ Daily Chart

The Russell 2000 (IWM) remains the index of concern. While other indexes are challenging highs, the Russell 2000 is still trying to work off its lows.

The MACD is on a weak 'buy' signal (the signal occurred well below the zero mid-line), and other technicals are net bearish. To add insult to injury, today's candlestick ranked as a bearish engulfing pattern, coming off 20-day MA resistance.

IWM Daily Chart

IWM Daily Chart

Whatever happens in the days and weeks ahead, we have indexes working at forming bases. And base shaping is better than selling. If you are an investor, you should be in accumulate mode.

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Comments (5)

Stephen Fa Mar 31, 2023 1:52PM ET

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High risk to buy now.

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Name Surname Mar 31, 2023 1:41PM ET

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today's data is lower than expected. market &economy is going down but yes say people to buy and accumulate. Are you wants sell your stocks?

3 1

Brian Dodge Mar 31, 2023 8:34AM ET

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accumulating ahead of a recession is what, as Goldman Sachs says, the muppets do. good luck with that

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Bob Collins Mar 31, 2023 8:33AM ET

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Democrats lost the house so Biden can’t destroy the economy anymore, but the ramifications of the horrible energy policy, infrastructure and omnibus bills hasn’t fully been felt yet.

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B B Mar 31, 2023 7:24AM ET

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Great analysis, many thanks!

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