Russell 2000 Approaches 200-Day MA, S&P Breaks It; NASDAQ Will Follow
Declan Fallon | Feb 18, 2019 12:07AM ET
Friday was another day where bulls chalked up a victory and indices posted gains across the board. Some indices did better than others but there is no clear weakness to work off yet.
The S&P was able to break past its 200-day MA on higher volume accumulation. However, it's coming up against declining resistance. The MACD has already cleared comparable resistance with new highs which would suggest the S&P will be able to do likewise. Other technicals are in good shape and only relative performance (vs the Russell 2000) is underperforming.
The Russell 2000 was one of the biggest winners on Friday as it pushed on after its earlier week break of declining resistance. Next up is its 200-day MA. The index was hardest hit by December selling and it still appears to be benefitting from buyers who view this as the 'deep discount' offer. Of all indices, it has the strongest relative performance advantage and is the one most likely to continue its run of gains. When the overall rally eventually stops its likely to be Large Caps which will be first to crack before the damage hits the Russell 2000.
The NASDAQ had a relatively low key day as the index stalled out at its 200-day MA on a narrow-range doji. Other technicals are all in good shape, including a relative outperformance against the S&P—which cleared its 200-day MA on Friday. Look for the NASDAQ to follow suit this week.
Aggressive shorts looking for a play could try and attack the 200-day MA, particularly if there is a gap down on Tuesday (fade the counter-rally back to the 200-day MA). Longs who bought the 50-day MA retest in January should probably take some profits (sell covered calls?) for what is a nice gain.
Get The News You Want
The Semiconductor Index continues to inch along channel resistance. Surprising how strength in this index hasn't filtered through to the NASDAQ and NASDAQ 100, particularly as the Semiconductor Index is trading up against September action.
Of other charts, there was a cross in the NASDAQ and NYSE new 52-week highs and lows, further suggesting a significant swing low is in play.
For Tuesday, if sellers make a go of it then the NASDAQ is looking the most vulnerable to such losses. The Russell 2000 still has some wiggle room to add some gains before reaching natural resistance.
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.