Small-Caps Nears 200-Day Moving Average

Small-Caps Nears 200-Day Moving Average

8:00am (EST)

The market was slightly sluggish to start the shortened week as trade talks with China continued in Washington on Tuesday, with higher level negotiations starting later in the week.

The tight trading ranges expanded in the second half and the higher closes were bullish signals as the week after February options expiration is typically bearish. Volatility stayed slightly elevated after holding resistance on the open while closing below the 15 level for the 2nd-straight session.

The Russell 2000 rose 0.3% while testing a high of 1,578 in the final hour of trading. Fresh and lower resistance at 1,570-1,580 was cleared and held with additional hurdles at 1,590-1,600 and the 200-day moving average.

The Nasdaq gained 0.2% after making a late session run to 7,507 Fresh and lower resistance at 7,500-7,575 was cleared but held on the 2nd-straight close above the 200-day moving average.

The S&P 500 also added 0.2% following the late day push to 2,787. Lower resistance at 2,775-2,800 was cleared and held with a move above the latter getting 2,825-2,850 in play.

The Dow was up 8 points, or 0.03% after trading in a 141-point range while testing a high of 25,961. Fresh and lower resistance at 26,000-26,250 held with a close above the former being a continuing bullish development.

Materials and Utilities led sector strength after rising 0.6%. Consumer Staples and Consumer Discretionary advanced 0.5% and 0.4%, respectively.

Healthcare and Industrials were the only sector laggards after falling 0.2% and 0.04%.

VIX Update 2-18-19

The S&P 500 Volatility Index ($VIX) traded to a fresh 2019 low following the late Friday fade to 14.79. Lower support at 15.50-15 was cleared and held. A close below 14.50 would be a continuing bullish development for the market with downside risk towards 13-12.50.
Resistance remains at 16-16.50 and the 200-day moving average. A close above 17.50 would be a slightly bearish signal. This level has been breached but has held 3 times this month.
RSI is back in a downtrend with near-term support at 35 and the longer-term bottom near 30 and representing the March 2016 low. Resistance is at 40-45 with a move above 50 being a bearish signal for the market and signaling a possible near-term top for the major indexes. The 50 level has held throughout 2019.
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