Small-Caps Show Strength Despite Spike in Oil

U.S. markets were choppy throughout Monday’s action following drone strikes on an oil facility in Saudi Arabia over the weekend. The attacks, which the U.S. has blamed on Iran, hit key Saudi facilities, disrupting 5% of the global daily oil production.

Despite the heightened geopolitical risks and the spike in oil, the major indexes held near-term support levels with the small-caps showing strength throughout the session. Volatility was elevated but held prior resistance levels and is back at a neutral reading.

The Russell 2000 rose 0.4% despite the morning back-test 1,570. Fresh but shaky support at 1,575-1,565 was split with risk to 1,550-1,540 on a move below the latter. The intraday rebound to 1,590 and close a half-point below lower resistance at 1,585-1,600 was a slightly bullish signal for the overall market.

The Dow declined 0.5% after testing a midday low of 27,032 while snapping an 8-session winning streak. Upper support at 27,000-26,800 held with a move below the latter getting 26,600 and the 50-day moving average back in play.

The S&P 500 was down 0.3% after testing an intraday low of 2,990 while closing below the 3,000 level for the 1st time in 4 sessions. Prior support at 2,975-2,950 is back in focus with a move below the latter and the 50-day moving average being a bearish development.

The Nasdaq gave back 0.3%, as well, following the opening low at 8,121. Near-term and upper support at 8,150-8,100 was breached but held with a close below 8,050 and the 50-day moving average signaling additional weakness towards 8,000-7,950.

Energy led sector strength after zooming 3% while Real Estate added 1% to round out the winners. Materials were the weakest sector after falling x while Consumer Staples and Consumer Discretionary dropped x and x, respectively.