Russell 2000 Holds Key Support; Nasdaq, S&P 500 Turn Net Bullish: What Lies Ahead?
Declan Fallon | Sep 04, 2023 08:09
The Labor Day weekend will keep things on hold for another day, but the coming week is important for lead indexes. We have the Russell 2000 (IWM) at the cusp of a return to a net bullish state in its technical picture, matching the state for the Nasdaq and S&P 500 on the daily timeframe.
The only holdout is the stochatic [39,1], which hasn't yet crossed the midline. Friday's closing candlestick for the Russell 2000 was a little iffy and, in combination with stochastic mid-line resistance, could spell a period of weakness for the week. However, from a price perspective, it's trading above $189 breakout support and key moving averages, so there is reason to be optimistic here. Another tick in the bullish column is the net accumulation in volume.
There are some minor concerns for the Nasdaq. It enjoys solid, bullish technical strength, with the index outperforming the S&P 500 and the Russell 2000 (IWM). The only concern was Friday's bearish candlestick (that some may view as a bearish engulfing pattern on Thursday's bearish 'gravestone' doji), which may also lead to some downside in the early part of the week. Certainly, for Tuesday, I would be looking for a lower close, but not a close below key support of 13,850 (intraday violations accepted though).
The S&P 500 may have had the best of Friday's action, although it too didn't have a great candlestick finish; a 'black' candlestick (higher open, lower close > previous day close) is never one to get excited about as a bull. If there is a weak start to the week for the Russell 2000 ($IWM) and Nasdaq, I would find it hard for this index to buck the trend.
Get The App
There was a risk in the early part of last week for a head-and-shoulder reversal across the lead indexes, which seems to have passed with the push beyond what would have been the left-hand-shoulder high (the price peak from early June). So, instead, what we are looking for is an ease back to the June swing high, preferably with a successful support test and bounce.
If this is not the case, we are looking at a test of the June/August swing lows to set up a possible longer trading range, perhaps lasting into Christmas. The Nasdaq and S&P 500 are trending above their 200-day MAs without being too extended, so I don't have many concerns with these indexes. The Russell 2000 (IWM) is playing with a fire a little, but this is more of a "holding" pattern rather than anything outright bearish.
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.