The divergence between the indices persists, with the Nasdaq, S&P 500, and Russell 2000 taking different paths. The Russell 2000 witnessed a surge on Thursday, which extended into Friday’s premarket and opening sessions.
Despite strong buying volume, maintaining price momentum was a challenge for buyers as the day progressed on Friday. However, there remains ample opportunity for buyers to establish their position, especially if late selling pressure from Friday spills over into Monday; the $210 level for IWM (Russell 2000) stands out as a critical support turned resistance level worth monitoring.
For more cautious traders, a glance at the S&P 500 might be reassuring. Even though Thursday’s selling could have triggered a downward spiral on Friday, buyers showed resilience by defending key support levels. This resilience is likely to carry forward into the upcoming session, potentially targeting new all-time highs.
The Nasdaq mirrored the S&P 500’s behavior on Friday, but the re-entry into a bearish wedge pattern raises concerns. While the prospects of a Monday rebound appear balanced across the indices, the Nasdaq faces a higher risk of potential downside if sellers seize an early advantage.
An important indicator to monitor is the weekly candlestick in the Nasdaq for the upcoming week. The formation of an indecisive doji candle after a period of consistent gains suggests a potential reversal. A gap down or a bearish candlestick could signify a trend shift towards more selling pressure in the weeks ahead.
While indications point towards a potentially bullish Monday, the Nasdaq’s performance will be crucial in setting the tone. A weak start here could pave the way for breaching bearish wedge support, potentially benefiting the Russell 2000, which has thrived amid the weakness in the Nasdaq and S&P 500.
