Small Caps Stocks Continue To Be Broad Market Headwind

Brandon Van Zee

The US stock market sold off for the 3rd straight day after a disappointing Consumer Confidence number and a 10-year U.S. Treasury yield declining below 2% for the first time since 2016.

The S&P 500 Index (INDEXSP: .INX) closed lower by 0.95%.

The Russell 2000 Index (INDEXRUSSELL: RUT) produced a weakly bearish intermediate posture according to the Market Forecast today. The other U.S. equity indices still have bullish postures.

The Russell 2000 is the only major U.S. equity index to not have a “3 Green Arrows” signal.

The Russell 2000 has a death cross on the 10/40 weekly moving average system; keep in mind that the Russell indices will be rebalancing this Friday and will likely cause heavy volume for stocks involved in the shuffle.

The VIX Volatility Index, U.S. Dollar Index, Gold, and government bonds all rose today as money was seeking safety outside of the stock markets.

Crude oil and agriculture commodities also rose today but haven’t been creating as many headlines as has resulted in the recent surge in gold.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Mid-Week Stock Market Video – June 25, 2019

Some additional insights from today’s stock market outlook video:

  • Most foreign stock markets have bullish intermediate postures aided by a relatively weak U.S. Dollar; the strongest trends remain Russia and Australia.
  • Considering the waves being made by interest rates, it was a bit surprising to find that the two sectors with a bearish intermediate posture as of today’s close were Financials and Real Estate, which typically move opposite of one another from an interest rate sensitivity perspective.
  • Consumer Discretionary and Industrials are at risk of putting in a double top pattern after three consecutive days of selling.
  • On Friday’s Sector Selector rankings, we saw Real Estate fall a few slots to number 4 and Technology popped into the number 2 position.
  • Our trade application example featured selling a bear call spread on the S&P Retail ETF (XRT) due to its posture change back to bearish and its inability to hold above the falling 30 day moving average.

Twitter:  @BrandonVanZee and @Market_Scholars 

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.