The only broader market index that currently trades above both its 50-day and 200-day moving averages is the Russell 2000 (RUT.X) and it almost makes a trader or investor want to root for this index that is often time overlooked and perhaps under followed. Today, I was looking at where certain indexes and sectors were trading as it related to the first Fed rate cut in January and was having trouble figuring out where the money was flowing too. Most of the major sectors were lower than they were on January 3rd, but bond YIELDS were also marginally higher. The money from the markets had to be going somewhere! Well, I do think that a lot of money has left the market and resides in saving accounts or was used to pay down debt, but the Russell 2000 Index (RUT.X) does give indication that is has been attracting capital as the index was trading at 462 on the January 2nd close and trades slightly higher today at 495.
Russell 2000 Index Chart - last eleven months
Technically speaking, the RUT.X is the strongest of the major stock indexes. It comprises some of the smaller capitalized names in the market and perhaps give hint to sponsorship from bulls. Support looks to be trying to build at the 480 level and some of the smaller cap stocks that look to be breaking out of bases might be just the ticket where a trader can be mixing in some trades with their account. I'm going to try and do a screen of stocks based on market capitalization and come up with some names and potential bullish candidates. Considering this index traded a high of 614 back in March of 2000, there's still plenty of time before the bulls begin running wild.
Not so healthy
Nothing has really changed since our last update, except that the Retail, Drug, and Healthcare Indices have joined semiconductor and oils stocks in negative territory.
Healthcare Index Daily Chart
After failing to get above the 200-day moving average on its third attempt, the Healthcare Index has posted lower lows for the past three days. Today looks to be another one, as the index approaches support at 800. When and if that level is touched, the sector should be sufficiently oversold by then, and due for a bounce. If not, 780 should be the next support level.
First Health Group Daily Chart
Why just yesterday First Health Group (NASD:FHCC) had set a new 52-week high, but today is selling off by $2.03. FHCC has managed to rebound off its lows of the day, and now sits back above the 50-day moving average and 38.2% retracement level. Should that level be lost, $22 looks like the next support level. A stochastic that is starting to break down suggests that support may be needed in the near future.