Is This The Spot For A Small Cap Bounce?
The beaten-down Russell 2000 Small-Cap Index has reached a confluence of significant potential near-term support levels.
Stocks are off to a historically poor start to 2016. For some market segments, however, this is far from the beginning of their difficulties. Small-cap stocks, in particular, have been especially bloodied since topping in June of last year. As a result, it’s not surprising to see that small-caps are among the first groups to encounter what we would consider a potentially significant price level of support.
Now, if you have followed us for awhile, you know that we are far from optimistic regarding the longer-term outlook for stocks. That said, there are some price levels that should serve as, at least temporary, bounce points. Based on our read of the chart, the Russell 2000 Small-Cap Index is hitting one as we write.
Specifically, the following not-insignificant levels align near the 1032 level in the Russell 2000:
- The 61.8% Fibonacci Retracement of the rally from the early 2013 breakout into all-time high territory to the 2015 top
- The 38.2% Fibonacci Retracement of the 2011-2015 rally
- The post-2009 Up trendline connecting the 2011 lows
- The 1000-day (approx. 200-week) simple moving average
- The October 2014 lows
Each of these analyses by themselves are noteworthy. The fact that they all align at almost the same exact level is significant. We don’t believe that is a coincidence as there is an order to markets that, upon first blush or to the uninitiated, may seem totally random. And we often say that the more significant analyses that line up in the same vicinity, the more confidence we have that the level is relevant.
What should we expect out of a bounce, if it occurs. This quintet really is a substantial set of levels so it should produce more than yesterday’s half-a-day rally in the Russell 2000. Under normal circumstances, we would expect the area to provide at least an intermediate-term low, that is, lasting several months. However, due to current circumstances (i.e., a potential developing cyclical market top including a possible recent game-changing breakdown), perhaps expectations should be ratcheted down a little.
So, we would not be surprised to see the Russell 2000 attempt to bounce, or at least hold this area for several weeks to perhaps months. At a minimum, stock risk, which had been heavy in the small-cap area, has perhaps shifted in a material fashion toward the larger-cap areas that have more room to drop before encountering similar potential support.
Then again, outside of a brief false breakdown, should this level fail to provide as much as a speed bump and the Russell 2000 slices right through it, then perhaps a more devastating market decline is already at hand.
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More from Dana Lyons, JLFMI and My401kPro.
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Thanks Dana.
Small caps have already sliced through that quad support like a hot knife through butter
http://www.goldsqueeze.com/home/sp-500-re-death-crosses-small-caps-a-mess
Please let this shit show crash. Getting old and bored.
Near-term support levels mean nothing in a massive credit/bond bubble.
Why are we still drawing lines on charts in a fake market?...
I think they do actually... yes you can see the daily manipulation, but when it comes down to it TPTB are not above and beyond succumbing to gravity.
1032?
RUT currently at 1024
Whoops...
Oops 1018
1010
That really said a lot of nothing. Support for "several weeks to perhaps months"?
Hopefully it won't dither around at support and it'll just slice right through on the way down...
I don't know, it sure feels like a more devastating market decline is already at hand. Call me crazy, but it seems like it's being engineered by the fed.
paging bag holder for an economy built on printed money.... Hillary is in need of bag(for her head)...so it makes complete sense why she will be president.
I am hoping that Hitlery will be wearing prison blues. The bag would be a nice touch.
And their bankster pals. There isn't a lot of hot air waffle trying to hold the "market" up this time
Problem is S&P needs most likely to test the august low. If that's the case 1032 isn't going to hold. 1000-1007 maybe for a short bounce but how likely is it that the 1867 is going to hold for anything other than a quick bounce.
or the FED could annouce printing $40 Quintillion....because zero rate interest...infinite debt makes sense! Ask Zimbabwe where it is 10 to the 30th power to the dollar
Visions of Dead Cats are dancing in my head. :)
My question to the bulls is - exactly who do you think is going to be buying right now, and why?
Okaay. [/Brother Boy, Sordid Lives]
0:21 https://www.youtube.com/watch?v=ZmdeEAMiWKQ
Looking at the Dow and ES h-4 charts and they are not oversold. If anything they're slightly overbought. It's when you move out to daily charts that they're slightly oversold.
We all know daily charts can look overbought or sold for months, if not years at a time.
Sorry, the index will push below this line within the next 5 days after some additonal sideways action. Alfter the push through the price action will rally to the underside of the line for one final display of respect ("kiss goodbye") and than a violent fall will insue.
Good night
Why is the DOW going down?
I thought we got beyond this on Monday and Tuesday. Jez....
not to mention an almost perfect head and shoulders.
this crash is going to show the problem with etfs and the effect on the market when buying and selling baskets of stocks. on the way up a lot of stocks that have no business going up go up. on the way down a lot of stocks that shouldn't fall do. i have a coupls fast growing, profit making companies that have suffered 50% haircuts already. in a real world they look like unbelivable opportunities. in the etf world they have more to go down.
That's why hedging techniques were invented.
puts in place
I'll buy when oil goes below $25, IBB drops to $125 and unemployment rolls go over 525K
We are told that technical analysis was able to use historical trends, caused by free market dynamics, to predict future free market actions.
Today we know that there is no free market and that either technical analysis never gave us a representation of free markets OR that now the manipulators of the market are making it look as if their manipulations mimic free market dynamics.
RUT near-term support? You mean from yesterday's intra-day chart? bwahahahahahahahahah
My chart shows RUT presently knifing thru any Oct 2014 support at 1022. The low reached in Oct 2014 was
1040 and the lowest close from the period was 1049. Currently about 3% below the Oct 2014 lowest close.
DWCPF is also under severe pressure.
head & shoulder break down, will start crashing from here.
Break down!
Go ahead and give it to me;
Break down!
Honey take me thru the night;
https://www.youtube.com/watch?v=LJQQYUjPUNQ
probably will find something here. Down is now popular....and todays volume is HIGH, all the cool kids are getting short, now that we are -12%....thus, look for +5% over the next couple weeks....
That chart shows as pretty a head and shoulders top as I have ever seen. Now that it has sliced thru 1040, expect support at 750 -800.