S&P 500, Nasdaq Held Back by Russell 2000: What’s Next?
2023.07.24 04:03
Last week, Friday’s selling in the ( added to Thurday’s down day, and volume rose in confirmed distribution. This built on the Wednesday doji and its reversal potential at the end of a rally. Despite this, technicals remain net positive. This is of little real concern until we see a test of breakout support around $189 and the 20-day MA (which is close to $189).
IWM Daily Chart
The is also easing back to breakout support along with the fast-rising 20-day MA. Unlike the Russell 2000, there is creeping bearishness in the technicals with a MACD trigger ‘sell.’ In addition, the Nasdaq has moved to a period of underperformance relative to the . There is still plenty of room before support is tested, but it’s likely to do so before the other indices.
COMPQ Daily Chart
The S&P 500 held up the best on Friday, but the ‘black’ candlestick is not ideal. However, because the volume was up, it will record itself as accumulation. The S&P 500 is outperforming the Nasdaq but underperforming against the Russell 2000. Given that, I think the attention will shift to the other indexes, and the S&P 500 will tick along.
SPX Daily Chart
If there is an index holding the others back, then the Russell 2000 (IWM) is the one. The long-standing base on the weekly chart, dating back to early 2022, is ready to clear $198 and kick-start the formation of a right-hand-side base. When this happens, it will provide a slingshot for the other indexes to continue their rallies.
IWM Weekly Chart
