Nasdaq Prepares for a Breakout, Russell 2000 in Trouble
Declan Fallon | Apr 17, 2023 07:18
Two very different things going on in the market at the moment.
Nasdaq continues to prepare for a breakout. This time forming a mini-handle just below resistance. Aside from On-Balance-Volume, we have bullish technicals - although I would like to see a relative outperformance against the S&P 500, which is not the case currently.
On the other side, we have the Russell 2000 (IWM), which is struggling to build off its March swing low. This is a major concern, as the 200-day MA is now proving significant resistance.
Cyclical and secular bull markets depend on growth stock leadership, and we are not seeing this here. Technicals are okay, in so far as only stochastics are bearish, but the relative performance against the Nasdaq is shocking.
The S&P 500 is siding more with the Nasdaq. While it hasn't shaped a 'handle' below resistance, it has managed to hold above 4,060 support while challenging 4,190 resistance. Technicals are net bullish, and it is significantly outperforming the Russell 2000.
Going forward, there is a long-side opportunity in the Nasdaq. However, if the Russell 2000 continues to weaken - even if the Nasdaq manages to breakout - I would err on the side of caution and tighten stops on any tech breakout traded; double so should $IWM break below $169
Get The App
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.