Looking back to the structure that had contained the Russell 2000 (RTY) futures index prior to the pandemic selloff, price action is now testing it again.
What was once printed as resistance is now printed as support and currently supporting price action for the small-cap index.
For those unfamiliar with the Russell 2000, it is the primary index for companies with small market capitalizations, or “small caps” for short.
What defines a small cap?
Well, these are companies boasting market caps of between $100 million and $1 billion.
I realize that’s a broad stroke, but the Russell is where the smaller, publicly traded companies are typically traded.
From the top of the market to the most recent low, it’s dropped roughly 33%.
But looking at the technical picture and the support structures, it could be possible that price has approached a near-term bottom on the Russell.
Time will tell, but we’ll likely know for sure if that happens or not in the coming weeks.
If the market begins to settle below the area I’ve indicated by the shaded green box, then the market will likely suffer further downside.
If it doesn’t, perhaps the market could start ascending!
Join Me for More
I run two research services focused on small cap stock investing, Rapid Wealth Alliance and Small Cap Fortunes.
Both monitor companies within that market cap range and look for long-term investment opportunities in well financed, heavy cash and low debt balance sheet companies.
We like small caps because they typically fly under the radar on Wall Street.
They’re not talked about like Google, Apple, Facebook, Netflix and all those high-profile companies.
But when they move, they move… In fact, they can move huge percentages in short periods of time!
For example, our model portfolio recently booked a gain in Natus Medical Incorporated (NTUS) for a 50%+ return as well as partial profits of 15% on Sanderson Farms, Inc. (SAFM).
We invest in undervalued companies that are flying below the radar, knowing that when it’s their time to shine… the upside potential can be astronomical!
We expect hold times that could last several years, but we’ve already started booking profits on a few of our positions in just several quick months as you can see.
And I look forward to seeing you on the inside next Tuesday for our live weekly session!
Rules to Live By
“No matter how your heart is grieving, if you keep on believing, the dream that you wish can come true.” Cinderella
Until next time, I wish you a beautiful and blessed day!
Yours In Trading Success,
Anthony Speciale Jr.