Russell 2000, Nasdaq Look to Escape Bull-Trap; S&P 500 Eyes Positive Open
Declan Fallon | Mar 18, 2024 03:18AM ET
Options expiration may have clouded Friday's volume, but Friday's buying in the Russell 2000 (IWM) did not do enough to challenge the "bull trap" or the loss of the 20-day MA.
The index deals with 'sell' triggers in the MACD, On-Balance-Volume, and relative performance against the Nasdaq.
The expected result of the 'bull trap' is a move back to - then below - support defining the trading range off which the original breakout emerged. For the Russell 2000 ($IWM), this means a move back to $188s.
The Nasdaq has just drifted below breakout support and its 20-day MA, enough to count as a "bull trap". If there isn't a return above 16,055 today it will effectively confirm the "bull trap", but there is still time for the index to get out of this.
The S&P 500 was the index not to flag a 'bull trap' and could potentially lead a recovery off its 20-day MA. If there is a long play today it will be in this index.
For today, we will want to see a positive open, especially in the S&P 500. Given the vulnerabilities of the Nasdaq and Russell 2000, a gap higher on the open would likely lead to more selling, so a slow-and-steady approach is perhaps preferred.
As the Russell 2000 ($IWM) is furthest away from prior breakout resistance, it's most likely to see a short-attack on a return to this level.
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