The Russell 2000 is Flashing A Major Warnings For the Stock Market

It wasn’t a great day for stocks with the S&P 500 drifting lower by 30 basis points, giving back a good portion of yesterday gains. At the end of the day, not much changed from yesterday.

spx

spx

Russell 2000 (IWM)

What did change from yesterday, is the Russell 2000 which tanked by over 1.35%. It managed to finish the day at a pretty significant level around 1,455. I fear that this index is not going to hold support. If you look at the chart, you can see why I am so nervous about the index not holding support. You can see that the outcome could be disastrous, with the potential to fall back to roughly 1350, should support not hold. It is a drop of about 7% from its current level and more than 15% off its July 31 highs.

Is that bearish enough for you? The biggest complaint among readers is how I’m a permabull. Wrong. I call it as I see it.  I talked about this in more detail plus gave a lesson on how I use Bollinger Bands into’s video: It Is Time For Stocks To Sink Or Swim

russell, rut

russell, rut

The last time the Russell 2000 was this undervalued to the S&P 500 was in January of 2008.

russell 2000

russell 2000

Amazon (AMZNWealth Strength IndexAAPL is Extremely Up and trending Up)

For the moment, Amazon is holding on to support around $1,750. It too is at a critical level. Should the $1750 level break it could fall to about $1700.

amazon, amzn

amazon, amzn

Netflix (NFLXWealth Strength IndexAAPL is Extremely Up and trending Up)

Netflix continues to orderly trade lower and seems to be holding the falling wedge pattern. There is a gap that needs filling around $273.40. At this point, that gap looks like a potential option as well.

netflix, nflx

netflix, nflx

Twitter (TWTRWealth Strength IndexAAPL is Extremely Up and trending Up)

Twitter looks as if it may be getting ready for its next higher towards $46.

twitter, twtr

twitter, twtr

Micron (MUWealth Strength IndexAAPL is Extremely Up and trending Up)

I’m not a fan of the shape of Micron’s chart. Support at $42 is critical and must hold, or $38.70 is coming.

micron, mu

micron, mu

I have been seeing a bunch of options activity for AT&T in recent days, and the technical chart is starting to look much better.  You can read more here. AT&T: The Trend Is Your Friend

t

t

That’s going to be it for today

Source: Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.