Russell 2000 Forms Infamous Bearish 'Death Cross' Pattern

On Wednesday, the index’s 50-day moving average crossed beneath its 200-day moving average — what would be the “death cross” formation.

The death cross can occur in individual stocks, within various funds, and when examining indices and averages. Considered a bearish signal within the market, a death cross occurs when the short-term, 50-day moving average, also called a price trend, crosses below the long-term, 200-day moving average. It is named a death cross due to the X shape it makes when the trend is charted and is often considered a sign of further losses for a particular stock.

This is the first time that the 50-day crossed below the 200-day since September, 2016.

The Russell 2000 has experienced 22 death crosses since its inception, and on average, the index loses an additional 0.8% one month following a death-cross formation. But three months later, on average, the index has gained 2.8%, and one-year later it has typically gained 12.5%, according to the Dow Jones Data Group

But will this time be different.....lets go to the weekly chart?

Bearish Divergence

Weekly Uptrend Line From February 2016 Broke

Whatever conclusion you draw the levels to monitor are the weekly demand at $1400 and the weekly supply at 1720.

The immediate levels to pay attention to over the next 1-2 weeks is 1600 above price and 1460 below price.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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by rollandthomas