Russell 2000 Maybe the Canary in the Mine


Russell 2000 Technical on

The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.

The Russell 2000 is by far the most common benchmark for mutual funds that identify themselves as “small-cap”, while the S&P 500 index is used primarily for large capitalization stocks. It is the most widely quoted measure of the overall performance of the small-cap to mid-cap company shares.

The #Russell2000 $RUT has been in a distinct downtrend since hitting a peak of price on April 26. It is in a technically more fragile state on a short time frame than the large-cap indexes.

Pulling back to a 1-year view shows a different perspective, notably on a closing price basis chart. In that case the index has been trapped in a range since late November/early December 2016.

Resistance is easy enough to spot at 1400, a level that has only been briefly breached before selling resumes.

For support on the 1-month time frame it is the 1380 area that is key. A breakdown below 1380 that does not produce a bounce would be a distinct negative technically on a multi-month basis, but not a yearly basis. Next significant support would be at the 1360 area.

If there was a breakdown below 1360, the 1340 area would be the next level of importance. While the index is in a more bearish state on a relatively short time frame, only a break below 1340 that persists below 1340 would break the longer-term uptrend. And even then, a break below 1300 would be needed to snap the multi-year uptrend.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.