- The Russell 2000 isn’t a market that I cover very often, but it is worth paying close attention to as it gives you a good look at the US economy in general.
- These are smaller companies that tend to be much more sensitive to the macroeconomic situation in America, and it is worth noting that they have had a very rough Friday.
- However, of equal importance is the fact that both Wednesday and Thursday were extraordinarily bullish.
- In fact, we are just now getting to the top of the Wednesday range despite the fact that it’s been a somewhat ugly day.
Technical Analysis
During the session on Tuesday, the market fell toward the 50-Day EMA and bounced to form a bit of a hammer. Jerome Powell then gave the green light for at least 3 interest-rate cuts between now and the end of the year, and Wall Street took off. At that point in time, it looks like we are very much in the hunt to try to find value as it occurs. I think this is a market that will continue to be very choppy, but it will have an upward trajectory, just like the rest of the US indices. Unfortunately, retail traders typically miss out on this market because it doesn’t get all of the headlines. However, that’s a huge mistake.
As a general rule, if the other indices are doing well, so does the Russell 2000. It tends to be a little bit more aggressive than some of the other markets, and it’s probably worth noting that we have just broken out of some kind of ascending triangle, and this pullback will almost certainly attract value hunters. In fact, it’s not until we break down below the 50-Day EMA that I would remotely consider this a market to worry about. I do believe that the Russell 2000 will not only recapture the $2100 level, but I think it ends up going to the $2250 level over the next couple of weeks.
That being said, the markets do start to sell off and melt down due to some type of macroeconomic event, the exact opposite is true. This index will fall much quicker than some of the other ones, and it’s one of my favorite shorts in times of extreme volatility.
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