Equity index futures came out swinging to start 2020, with the S&P, Dow, and Nasdaq contracts all surging into new all-time highs. The /NQ showed an especially strong movement, gaining almost 1.5% by the day's end and following a ramp into the close on Tuesday. But news of a U.S. airstrike that killed a top Iranian military commander sent futures tumbling in the overnight session, erasing much of the gains since the end of 2019. However, even before this surprise piece of geopolitical news shocked markets, Russell 2000 futures seemed to have a post-New Year's hangover.
The /RTY fell more than 1% yesterday, taking out the previous lows near 1660 before firming up near the 21-day exponential moving average and finishing down only 0.1%. Momentum had been flagging as well, with the MACD trending downward since Dec. 20 and making a bearish crossover on Dec. 30. If markets start to recover today, watch for upside resistance on the /RTY near the upper boundary of the Linear Regression 50% channel, currently near 1682, as the contract has tested this level and failed at an upside breakout several times in recent weeks. If small-caps continue to struggle, the overnight lows of 1639.70 and subsequently the 64-EMA near 1611 could be important support areas.
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