Black Friday Sale! Save huge on InvestingProGet up to 60% off

Nasdaq, S&P 500 Test June Lows; Russell 2000 Near Critical Support: What's Next?

Published 21/08/2023, 05:21 pm
US500
-
US2000
-
IWM
-
IXIC
-

The latter part of last week saw sellers pick up the pace, but buyers were not going to give up without a fight. In the case of the Russell 2000 (IWM), the 200-day MA has acted as a point of action for buyers. Volume rose in confirmed accumulation, although technicals remain net bearish.

IWM Daily Chart

The Nasdaq did manage a higher close compared to the open price, but there isn't a huge amount of support on offer. The swing low from June offers an opportunity for bulls to step in, but even then, there is a potential reversal off 13,865 that would mark a possible head-and-shoulder reversal pattern. Shorts could aggressively go short at this point, but short-term traders could look to buy Friday's finish for a move to 13,865. 

COMPQ Daily Chart

The S&P 500 is also testing June lows in what, like the Nasdaq, could turn into a head-and-shoulder reversal. Technicals are net negative, although stochastics are oversold. The index is outperforming the Russell 2000, which in itself, offers itself as a buying opportunity. Longs could take a punt here, but look for a reversal at 4,450 *if* a head-and-shoulder pattern were to emerge here.

SPX Daily Chart

If there is a chart to watch, it's the weekly chart for the Russell 2000 ($IWM). Friday's close has brought the index to converged support of 20-week, 50-week, and 200-week MAs; so by the close of business on Friday, we want to see continued support of these moving averages.

This would offer itself as a buying opportunity, but note how earlier tests of the 200-day MA have seen confirmed bearish crosses, all of which had managed to be rebuffed, but it does mean buying support here is the correct thing to do unless you are prepared to offer a wide buffer as a stop/risk.

IWM Weekly Chart

For the week ahead, look for an early rally for the S&P 500 and Nasdaq, then later, look for a close above key weekly MAs for the Russell 2000.

Latest comments

Loading next article…
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.