Mapping the market: US small cap stocks ripe for a rebound
IWM•The Russell 2000 fell as much as 9.97% from its August record before bouncing near a cluster of support levels. Technical analysis suggests a rebound is possible, with resistance near 2,865 and 2,931; a close below 2,722 could put 2,547 to 2,559 in focus.
1. Support levels tested
The Russell 2000 fell to 2,762.58 last Thursday, bringing it within a hair of correction territory, defined as a 10% decline from a record peak. It ended Friday near 2,807, down 8.5% from its record close. The index tested support between 2,722 and 2,789, including its rising 200-day moving average near 2,789.
2. Rebound and downside levels
The index’s 9-day Relative Strength Index fell below 30 in late September, and last week it did not make a new low alongside the Russell. The analysis says this setup, together with the support levels, indicates a greater rebound is possible. Resistance is near 2,865 and the falling 50-day moving average near 2,931; a decisive close below 2,722 could shift attention to 2,559 and 2,547.
