Markets – Macro – Technicals

$RUT

Small Caps, Big Trouble?

Following the big rally on the heels of the election small caps have gone nowhere. However the 1345-55 zone has held support 9 times now.  Last week’s one day wonder dip was bought again, but in process small caps have dropped below their 50 and 100 day moving averages and these moving averages are now converging. Failure to recapture these 2 MAs soon will likely invite a visit to the lower MAs creeping up including the 200MA.

A break below would constitute 5 months worth of supply above which could add sudden fuel to any surprise downside.

So far markets have avoided any serious trouble in 2017 and the upside risk ranges I have been discussing still apply.

But small caps may prove big trouble for this market should, what appears to be eternal support, suddenly break to the downside. Fib levels indicate potential retrace targets:

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