Nasdaq, S&P 500 Set to Consolidate; Russell 2000 Eyes Bounce Off Trendline Support

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S&P 500 News

US Small Cap 2000,Ishares Russell 2000 ETF,NASDAQ Composite

Stocks Analysis by Declan Fallon covering: S&P 500, US Small Cap 2000, iShares Russell 2000 ETF, NASDAQ Composite. Read Declan Fallon's latest article on Investing.com

Yesterday was set up to be a low-key day, but come the afternoon, sellers pounced and drove markets down hard after doubts arose about future rate cuts.Yesterday marked a clear breakdown of trendline support. It should be noted that the presence of the 50-day MA offers a point of defense but yesterday's loss does not mean we will see a crash; a time-led consolidation seems more likely.The day ended with a large bearish engulfing pattern.

However, the 'bull trap' is still in play and yesterday's action is registered as distribution. Given the action in the other indexes, I would probably favor a trendline break, but an aggressive 'buy' at the open may yield dividends, but use a tight stop if going long. For today, the Russell 2000 is probably the day trade for a bounce, although the large bearish candlestick is not one to strike confidence. The S&P 500 and Nasdaq may experience a narrow consolidation before the downtrend resumes.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.

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