Thursday's Market Minute: Small-Caps Stalling?

TD Ameritrade Network

Thu, Dec 3, 2020, 9:23 AM1 min read

Small-caps made big moves last month as Russell 2000 futures outpaced the other three major equity index contracts with a hefty 18% gain during November. The surge was enough to break into new all-time highs, but some technical indicators suggest this upward move may be taking a breather.

The MACD, which measures momentum, is showing bearish divergence from price and is on the verge of a bearish crossover, and the RSI has crossed back below the overbought area. Meanwhile, the Average Directional Index (ADX), which measures trend strength, has noticeably flattened.

Some key technical points to keep an eye on include the ParabolicSAR, commonly used to set stops, at 1816 and the Linear Regression 50% Channel upper line near 1800. A further downside move could pause near the 21-day EMA near 1770. If the upward trend continues, the two Standard Deviation Channel upper line near 1942 could be an important level to watch.

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