S&P 500 to Lead Nasdaq Higher Today; Russell 2000 Needs to Hold Above 200 DMA
Declan Fallon | Apr 29, 2024 08:41AM ET
There wasn't a whole pile of buying volume to go with gains, but the Nasdaq, S&P 500, and Russell 2000 (IWM) all did their bit to keep the nascent bounce going. It has the look of a zig-zag-like bounce, but until we see the "zag", these indices gains are set to challenge March highs. Traders have Thursday's lows for assessing any risk-reward longs for the coming week, although if we were to head down there this week it would probably amount to the start of the "zag".
Of the three lead indices, the bounce in the Russell 2000 ($IWM) looks to offer the best risk-to-reward ratio. Technicals remain net bearish, and the move out of oversold stochastics is one I would view with more skepticism than optimism (I want to see a mid-line cross in stochastics to be more confident of a long-term bullish recovery), but if it can make a higher low and stay above its 200-day MA it's an attractive option for longs.
The S&P 500 experienced an intraday reversal right at the convergence of 20-day and 50-day MAs. It remains close enough to this point that it could do so again today, but it has similar challenges as the Nasdaq; if one goes, I would expect the other to follow. The S&P 500 has a smaller spread between Friday's highs and Thursday's lows, so it might be the index to make the first move in this regard. One to watch for Monday.
While I'm not entirely convinced we have retraced enough off March highs to suggest the selling is done, but we also have had an uninterrupted rally since October 2023 that has controlled the market up to now. I think this move lower will attract enough buyers to take the indices back near their (or above?) March highs, before a stronger wave of selling send indices towards their 200-day MAs.
Strong trend moves are typically followed by scrappy trading ranges, not new trends in the opposite direction. What I'm really looking for are the lows for these ranges, and 200-day MAs make for a nice psychological bottom. Time will tell if this proves to be true.
Get The News You Want
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.