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Market Extra: Death cross set to form in key gauge of small-cap stocks — and that’s bad news for broader stock market

Don’t look now, but a closely followed gauge of small-capitalization stocks is on the brink of a bearish pattern.

The small-cap Russell 2000 index RUT, -1.82% is within a few points of seeing its short-term 50-day moving average fall beneath its long-term 200-day moving average, a formation in an asset that many chart watchers believe marks the point that a short-term decline morphs into a longer-term downtrend (see chart attached).

According to FactSet data, the Russell’s 50-day moving average is at 1,624.56, while the 200-day stands at 1,616.23, as of Nov. 9. That is an 8.33-point differential, or 0.5%, which means that the Russell 2000, which has been seeing a steady rate of decline over the past few weeks, could see a so-called death cross manifest as early as next week, should the current downtrend hold.

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