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Russell 2000 Holds Steady; Nasdaq, S&P 500 Search for Support: What Lies Ahead?

Published 09/13/2023, 03:24 AM
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There wasn't a whole lot of change from my last post. The Russell 2000 (IWM) is holding just above its 200-day MA but has been curtailed by its 20-day MA; this squeeze will have to resolve eventually, but the likelihood of a breakdown is higher because of the weak technical picture.

IWM Weekly Chart

The Nasdaq is pinned by its 50-day MA but is trading well above its 200-day MA. However, it's the selling from the peak at the end of August that is dominating current trading.

I would be looking for a retest of 13,161 swing low, and if that fails, then a move down to its 200-day MA.

One key aspect in its favor is that the technical picture is surprisingly resilient, so despite today's loss, there is still an opportunity for the 20-day MA to be the launch point for a renewed attack on its 50-day MA.

COMPQ Daily Chart

The S&P 500 is trading below its 50-day MA with a more mixed technical picture than the Nasdaq. I would view this as a status quo play (i.e., "hold"), with a test of the August swing low the most likely outcome in the coming weeks.

SPX Daily Chart

In closing, bulls will want to see a re-establishment of moving average support for the Nasdaq and S&P 500, with the Russell 2000 (IWM) continuing to hold above its 200-day MA.

Given the technical picture, however, we are more likely to see a break of this 200-day MA for Small Caps, which will drag the other indexes down low with it.

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