Can The Russell 2000 (Small Caps) Rally?
Small caps have been under pressure this year relative to larger market cap weighted benchmarks. Higher interest rates will remain a headwind for the Russell 2000, and to see more upside, we will need to see interest rate yields come off of their highs.
As of late, we have seen some relief on the longer end of the treasury yield curve, which has provided some support for the Russell. Moving forward, major support and resistance levels will come into play, and we will cover those levels here.
The Russell has built out a perfect head and shoulders pattern, and we can see that after the breakdown of the right shoulder, the Russell eventually found its footing at the 1720 – 1725 level. This will remain a major support level moving forward, and a break and close below is likely to be coupled with higher interest rate yields and more selling pressure.
Major resistance will remain at the 1820 – 1825 level, where the market has failed to get above numerous times. If we can break and close above this level, it is possible we could see more upside momentum, and this momentum is likely to be coupled with a rally in treasuries.
This is a very wide technical range of 100 points (1720 – 1820 ) however, the Russell is one of the most sensitive indices when rates are quick to change direction. It is possible that the Russell would be more range bound until there is confirmation in the direction of the U.S. Economy, and interest rates.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
As of late, we have seen some relief on the longer end of the treasury yield curve, which has provided some support for the Russell. Moving forward, major support and resistance levels will come into play, and we will cover those levels here.
The Russell has built out a perfect head and shoulders pattern, and we can see that after the breakdown of the right shoulder, the Russell eventually found its footing at the 1720 – 1725 level. This will remain a major support level moving forward, and a break and close below is likely to be coupled with higher interest rate yields and more selling pressure.
Major resistance will remain at the 1820 – 1825 level, where the market has failed to get above numerous times. If we can break and close above this level, it is possible we could see more upside momentum, and this momentum is likely to be coupled with a rally in treasuries.
This is a very wide technical range of 100 points (1720 – 1820 ) however, the Russell is one of the most sensitive indices when rates are quick to change direction. It is possible that the Russell would be more range bound until there is confirmation in the direction of the U.S. Economy, and interest rates.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.