Fundamental
Overview
The Russell 2000 last Thursday managed to break above a key resistance zone
following strong US Jobless Claims and Retail Sales data. The market
continues to fade the “growth scare” we got at the beginning of August and it’s
now looking forward to the Fed’s rate cuts. In fact, the rate cuts into resilient growth should
boost economic activity and risk sentiment which should be a strong tailwind
for the small cap stocks.
Russell 2000
Technical Analysis – Daily Timeframe
Russell 2000 Daily
On the daily chart, we can
see that the Russell 2000 got a boost last Thursday following the strong US
Jobless Claims and Retail Sales data triggering some key breakout on the lower
timeframes. The buyers piled in more aggressively and will now target a new
cycle high. The sellers will need the price to deliver some downside breakout
on the lower timeframes to start looking for new lows.
Russell 2000 Technical Analysis – 4 hour
Timeframe
Russell 2000 4 hour
On the 4 hour chart, we can
see that we got the breakout of the strong resistance around the 2110 level last Thursday
which increased the bullish momentum. We now have an upward trendline defining the current bullish
momentum.
If we were to get a
pullback, we can expect the buyers to lean on the trendline to position for new
highs with a better risk to reward setup. The sellers, on the other hand, will
want to see the price breaking lower to start piling in for new lows.
Russell 2000 Technical
Analysis – 1 hour Timeframe
Russell 2000 1 hour
On the 1 hour chart, we can
see that we have another minor support zone where the buyers will likely lean
onto in case we get a pullback. The sellers, on the other hand, will want to
see the price breaking below the support to position for a drop into the major
trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
On Thursday we get the US Jobless Claims figures and the US PMIs.
On Friday we conclude with Fed Chair Powell speaking at the Jackson Hole
Symposium.