Russell 2000, Nasdaq and S&P 500 Test Support: Time to Go Long?
2023.08.09 03:56
The market slip-and-slide continued. Markets that were trading at 20-day MAs now find themselves down at channel support, although in the case of the , the support test is breakout support – not channel support.
In the case of the S&P 500 and (), today’s selling volume rose to register as distribution. Today is a bit of a last-chance saloon for the rising price channels for the Russell 2000 and , but aggressive traders can look to go long at channel support.
In the case of the Russell 2000, there was a clear breach of channel support intraday, but the end-of-day close was enough to consider the index still inside support, as was the case in early July when there was a similar intraday channel breach.
IWM Daily Chart
The Nasdaq is also trading at channel support but without the higher volume selling of peer indexes. The (so far) successful support test, alongside the proximity of 50-day MA support, makes this a potential long-trade opportunity.
Technicals are bearish with the exception of slow stochastics, although stochastics [39,1] at the midline is a buying opportunity in a bullish advance. If we see an undercut of this mid-line, likely in association with an undercut of channel price support, we will instead have a move into a trading range or potential trend reversal.
COMPQ Daily Chart
The S&P 500 is holding up better than the Russell 2000 or Nasdaq. Not only is the technical picture better, but it hasn’t yet come back to channel support. As with the Nasdaq, there is a long trade opportunity here, although stochastics suggest there is more downside before we get to a ‘strong buy’ situation.
SPX Daily Chart
Traders do have two potential buying opportunities to work within both the S&P 500 and Nasdaq. The risk is relatively low, with stops going on a confirmed close below channel support.
