Unlike large-cap major indices like the Dow or S&P 500 which managed to reach record highs earlier this year, so far in 2019, the small-cap focused Russell 2000 never managed to so much as retest the highs from around this time last year. In fact, in the past year, other than the final leg down to December lows and the subsequent rally back up to previous levels in early 2019, the Russell has been in a range between support and resistance from last fall. This support and resistance can actually be traced back even further to the highs and lows of late 2017 and early 2018. This year has seen more tests of these support levels after May declines and once again this month.
At the beginning of August, the Russell collapsed through flat 50 and 200-DMAs finding relief at the bottom of this range. Since then, the index has been bouncing between this support and the 200-day with the most recent failed test of its 200-DMA coming just last week. Over the past few sessions, while it has not closed significantly below, intraday the index has breached these critical support levels. Fortunately, today the index is seeing some mean reversion from its extreme oversold levels as it is up rather than breaking out of the range to the downside. Start a two-week free trial to Bespoke Institutional to access our interactive Security Analysis tool and much more.