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

Russell 2000 on 'Crash Watch' as Nasdaq, S&P 500 Remain Above Support

Published 25/10/2023, 05:56 pm
US500
-
US2000
-
IWM
-
IXIC
-

At this stage, only weekly time frames are important as we track "Crash Watch". It's a tricky situation as the S&P 500 and Nasdaq don't look vulnerable, but the Russell 2000 (IWM) is really struggling.

Starting with the Nasdaq, we have a technical negative picture but it remains above 200-day MA support. This looks like an index in the process of forming a (multi-year) trading range, but even if this is the case, it's still early days as no trading range boundaries have been set.

COMPQ-Daily Chart

The S&P 500 tagged its 200-day MA, returning above this moving average after yesterday's close. The buying volume was less than the previous day's selling distribution, but there are grounds for buyers to step in at a logical support level.

SPX-Daily Chart

The Russell 2000 (IWM) did manage to post a gain, but the candlestick was a neutral doji, not one to inspire confidence. Technicals are bearish and oversold and show little sign of a recovery.

IWM-Daily Chart

Conclusion

It's still early in the week but yesterday's action does not inspire confidence. I would be looking for a down day today as indexes look to challenge lows.

The Russell 2000 (IWM) is now trading 14.9% below its 200-day MA, accounting for 95% of historic price action dating back to 1987; i.e. only 5% of price action since 1987 was weaker than what we are seeing now.

We don't know if the index will crash, but what we do know is that historically it's in strong buying territory. If you are an investor, don't be afraid to be a buyer. Future losses - should they come - will be short and sweet.

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.