There is another worry for the bulls - the performance of other equity indices. The #Nasdaq100 – the guiding star of investors in recent years – has stabilised in a narrow range since the beginning of last week. An attempt to develop growth on Wednesday was met with a sell-off, and Thursday also went to the bears' credit.
The #SP500 index, the leading market benchmark, stuck to the 4560 level. The bulls managed to close the gap from the beginning of August and seem to be exhausted. A side effect of this is the compression of volatility and the VIX index falling to multi-year lows, from which reversals have also often occurred.
The small-cap #Russell2000 index, the DJIA’s opposite, has been hitting horizontal resistance near 1810 for more than two weeks now, unable to get above its 200-day moving average despite a spectacular reversal in late October.
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The #SP500 index, the leading market benchmark, stuck to the 4560 level. The bulls managed to close the gap from the beginning of August and seem to be exhausted. A side effect of this is the compression of volatility and the VIX index falling to multi-year lows, from which reversals have also often occurred.
The small-cap #Russell2000 index, the DJIA’s opposite, has been hitting horizontal resistance near 1810 for more than two weeks now, unable to get above its 200-day moving average despite a spectacular reversal in late October.
📣Trade responsibly with fxpro.com
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Investors are focused on how all of today's events will impact year-end key rate expectations. Right now, rate futures suggest an 88% chance of a cut before year-end, with a 13% chance of a cut of more than 50 points. In other words, markets are plotting a 40-point decline in 2024.
A sharp rise in that number could support the markets' upswing by making it broader. In this case, the Nasdaq100 can reach 20,000 before the end of the month and the S&P500 to 5,600, while the road to all-time highs would open for the #DowJones and #Russell2000 in the perspective of a couple of months.
If inflation or Fed sentiment shifts expectations to one or less downside, however, it would prove to be a blow to the markets, capable of taking 5% or even 10% away from them in the next few weeks.
📣Trade responsibly with FxPro
A sharp rise in that number could support the markets' upswing by making it broader. In this case, the Nasdaq100 can reach 20,000 before the end of the month and the S&P500 to 5,600, while the road to all-time highs would open for the #DowJones and #Russell2000 in the perspective of a couple of months.
If inflation or Fed sentiment shifts expectations to one or less downside, however, it would prove to be a blow to the markets, capable of taking 5% or even 10% away from them in the next few weeks.
📣Trade responsibly with FxPro
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#Review
Promising divergence of Nasdaq100 and Russell 2000
Indices in the US went in different directions. While the market’s flagship gainer of recent years, the #Nasdaq100, has lost nearly 2.9% from its peak just after the CPI data, the index of small-cap companies, the #Russell2000, has soared 4.7% to date.
We saw one of the most notable one-day rotations in market history. This is only the second time since 1979 that the Russell 2000 has closed the day up over 3% (it was up 3.6%) against the backdrop of a decline in the S&P500. Considering the magnitude of the S&P500 and Nasdaq100 decline (0.7% and 2.3%, respectively), this was the largest divergence that occurred quite suddenly.
It’s easy to find justifications for a rally in a small-company index. A slowdown in inflation is a historically positive signal for such firms. Typically, during these periods, companies rebuild margins, getting a chance to keep up with the largest corporations.
Promising divergence of Nasdaq100 and Russell 2000
Indices in the US went in different directions. While the market’s flagship gainer of recent years, the #Nasdaq100, has lost nearly 2.9% from its peak just after the CPI data, the index of small-cap companies, the #Russell2000, has soared 4.7% to date.
We saw one of the most notable one-day rotations in market history. This is only the second time since 1979 that the Russell 2000 has closed the day up over 3% (it was up 3.6%) against the backdrop of a decline in the S&P500. Considering the magnitude of the S&P500 and Nasdaq100 decline (0.7% and 2.3%, respectively), this was the largest divergence that occurred quite suddenly.
It’s easy to find justifications for a rally in a small-company index. A slowdown in inflation is a historically positive signal for such firms. Typically, during these periods, companies rebuild margins, getting a chance to keep up with the largest corporations.
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