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Russell 2000: historical drawdowns point to more downside riskThe Russell 2000 's drawdown from its peak has been important (-26%), but not as severe as those seen during the dot-com bubble in 2002, the 2008 financial crisis, and Covid-19 at the start of 2020, when the US small-cap index plummeted by more than 40%. To reverse the current downtrend of the Russell 2000 , the underlying causes must also be reversed, which are primarily rising inflation and the need to raise interest rates. US ECONOMY: MACRO OVERVIEW Inflation is now widespread and is not solely due to increases in energy prices, such as oil and natural gas . The United States still has a very tight labour market that requires a rebalancing of supply and demand, to avoid further wage pressures. There are currently nearly two job openings for every unemployed American ( FRED:JTSJOL / FRED:UNEMPLOY ) and the labor-force participation rate has not recovered to pre-Covid levels. The result is a strong pressure on salary growth , which is currently at 11% year-on-year. The combination of higher energy prices and wage pressures raises labour input costs for US firms. Those who are unable to pass on higher costs to their customers will see their profit margins dwindle dangerously. In addition, since the Fed is firmly committed to raising interest rates , higher borrowing costs represent an additional drag on the growth outlook of small-cap firms. RUSSELL 2000 index: outlook The market believes that a recession will cause the Federal Reserve to slow its rate hikes or even reverse its policy stance. However, the Fed's focus remains solely on inflation, as the labour market remains close to full employment. To rebalance the labour market, the Fed will continue to raise interest rates aggressively. The short/medium term outlook on the Russell 2000 index remains bearish until the Fed signals a change, which is unlikely unless there is a major recession. A 40% drop from the peak would be a good entry point for opportunistic buyers to step in, indicating a wide bullish positioning clean-up. Such a level of drawdown corresponds to a Russell 2000 index level of 1,450.
TVC:RUT
by Capitalcom
1
AMGN: A High Probability Buy Setup Amgen Inc. has been trending up since December last year. We can observe that price has recently reached a higher high at the resistance level of 258.00. Therefore, we are only looking for buy entries for this stock. 258.00 is a very strong resistance level; we can see from the past that prices have rejected more than 9 times from this level. After rejections, prices retraced but eventually rose again to retest this level multiple times. Last week, price gapped down from this resistance level, dropping back to the trend line. Therefore, this gives us a great opportunity to buy the pullback. Entry Criteria: We can observe from the past price movement that when the price touched the current ascending trend line, a gap up immediately was formed, followed by a strong bullish momentum sending the price back to the previous high. Therefore, during the next few days, we will be looking for a gap up from the trend line. Then we will place our buy stop orders to capture the bullish momentum. This is a high probability buy setup because many factors support another bullish impulsive movement which could potentially send the price back to retest the recent high.
NASDAQ:AMGNLong
by NicoBeau_Capital
S&P 500 Downfall?The S&P 500 is very close to signalling the start of a potential bear trend in the market, something we have not seen since the 2007-2009 market crash. Yes, we have seen some bearish moves since, but not a long-term bear trend that has lasted for months/years. If this does come to fruition, it will be bad news for bullish investors who have held positions for years. But it will be good news for long-term trend followers who can adapt to market conditions and invest in the direction of current trends. Trend-followers are waiting for the opportune time to place short positions, but that time is not yet, and patience will need to be applied. The reason for us needing to apply patience is because the market can go either way. Price, at the moment, is still inside an area of consolidation and has been since January 4th 2022. When price consolidates, it tends to bounce between the consolidation low support level and the consolidation high resistance level, at $4114 and $4818, respectively. Currently, price is approaching the support level and could just bounce from this level and continue moving sideways between the support and resistance levels mentioned above. But, if price breaks down below support, this will trigger us trend-followers to pay close attention and be ready for a potential long-term bearish opportunity. The first breakout of support is not what we are looking for, as this may turn out to be a fake breakout and catches out the majority of investors. A pattern of lower lows and lower highs below consolidation will give us the signal to look for shorting opportunities. Unless this happens, we will continue to stand aside as we are in an overall bull trend which could resume if the support level holds. We will have to just stay on the sidelines and watch and wait for the right moment. If you like enjoyed this post, make sure to like, and follow for more quality content! If you have any questions or comments, comment below. We reply to every comment! See below for more information on our trading techniques. As always, keep it simple, keep it Sublime.
TVC:SPX
by Sublime_Trading
2
#SP500 IS IN DOWNTREND CYCLE?#SP500 is in a down phase since March 2022 - On the daily time frame, the bearish structure is forming sustainably with the continuous creation of HL-LL (Higher low, lower low); The price line has lost its balance and is completely below the averages; The important support zone at 4170 has broken down, supporting the mid- and long-term correcting trend; - On weekly time frame, the index is moving sideways with a amplitude of ~10%; we can easily see that a double top pattern is forming, and when combined with a downtrend structure => It is in favor of continuing the strong correcting trend in the next period;
SP:SPXShort
by Truong_Ca
1