The technical indicators for the S&P 500 and Nasdaq continue to show a net bullish trend, reflecting overall market strength. Meanwhile, the Russell 2000 is currently testing its 50-day moving average support level, which could be a critical point for investors to watch.
The Russell 2000 (IWM) initially broke through resistance on its way back to the July spike high, but yesterday’s decline has raised concerns about a potential double top formation. A confirmation of this bearish scenario will require a drop below $205, although the overall technical outlook remains bullish. There is also support from the nearby 20-day and 50-day moving averages.
IWM-Daily Chart
The S&P 500 appears more straightforward. Last week’s breakout is still intact, with technical indicators showing a net positive trend. Yesterday’s trading was subdued, maintaining a low profile while hovering near all-time highs. While follow-through is necessary, there’s no immediate rush.
SPX-Daily Chart
Similar to the S&P 500, the Nasdaq had a quiet session. Although it’s still a few weeks away from testing the July high, bullish sentiment remains intact. The technicals are net positive, and the Nasdaq is outperforming both the Russell 2000 and the S&P 500.
Nasdaq Composite-Daily Chart
One key indicator to monitor is the Nasdaq Summation Index ($NASI), which has encountered historic peak resistance that is beginning to roll over. Historically, this indicator can reach up to 500, but at its current level of 100, it’s approaching a critical decision point based on prior peaks.
NASI-Daily Chart
For today, keep an eye on the Russell 2000, as it is the only index showing signs of weakness. The S&P 500 and Nasdaq seem to be awaiting direction from it. With the Russell 2000 experiencing four consecutive down days, it’s likely due for at least one day of buying activity.