50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Russell 2000 in an Ascending Triangle Squeeze as S&P 500, Nasdaq Struggle

Published 09/04/2024, 08:09 pm
US500
-
US2000
-
IWM
-
IXIC
-

If there is a swing trade with plenty of tension ready to snap, it's in the Russell 2000 (IWM). The index looks poised to either negate the late March 'bull trap', or crack below ascending triangle support with a big, red candlestick.

Technicals still favor bulls, although the earlier MACD trigger 'sell' is a bit of a concern; note, MACD 'sell' triggers that occur above the MACD zero line are at best, weak 'sell' signals - often a good time to sell covered calls rather than offload a position.

On-balance volume continues to trend higher, and momentum, as measured by stochastics, is firmly above the 50 mid-level. If there is a break of the trendline, then look for a move back to $187-189 in a likely continued evolution of a time-based, sideways consolidation.

IWM-Daily Chart

It's a bit of a different story for the Nasdaq as it returns to its breakout price on a move to challenge its 'bull trap'. This index has already broken trendline support and the small doji at resistance points to trader indecision.

I would be looking for further losses with the MACD accelerating downwards. On-Balance-Volume is holding on, although momentum has finally dropped out of its overbought state; another indicator that the prior bullish trend is done.COMPQ-Daily Chart

The S&P 500 is in a similar precarious state as the Nasdaq, having also experienced a MACD trigger 'sell', but now looking at weakness in On-Balance-Volume with a 'sell' trigger too. Momentum is more bullish than for the Nasdaq and Russell 2000, but this has just dropped out of an overbought state.

SPX-Daily Chart

Going forward, I would be looking for the development of sideways (time) consolidations for both the S&P 500 and Nasdaq, and this is likely to have the knock-on effect of delivering a breakdown from the "ascending triangle" in the Russell 2000 ($IWM).

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.