Small-cap stocks were no exception either. Over that same period of time, the Russell 2000 Index rallied over 155%. The combination of rock-bottom interest rates and a steady stream of freshly printed dollars was like putting our financial markets on steroids.<\/p>\n
Of course, all that came to an end in 2022…<\/p>\n
Inflation came roaring back. This, in turn, forced the Fed to reverse course on their easy-money policies.<\/p>\n
Bitcoin dropped nearly 80%. The S&P 500 dropped nearly 28%. SPACs all but disappeared.<\/p>\n
It’s a new world out there for investors now. And that means new rules.<\/p>\n
There’s still some uncertainty around how high interest rates will go… not to mention how long they’ll stay elevated.<\/p>\n
But for now, uncertainty is the name of the game. That means the markets are likely to be a bumpy ride for many buy-and-hold investors.<\/p>\n
A perfect example is small-cap stocks. And while I’ve spotted a potential bullish opportunity in the S&P 500<\/a>, the Russell 2000 still looks like it needs to break lower first.<\/p>\n Let’s take a look…<\/p>\n <\/p>\n There are three key technical indicators here, the 20-, 50-, and 200-period moving averages.<\/p>\n These three moving averages highlight the short, medium, and long-term trends in the market.<\/p>\n Notice how prices have traded below all three moving averages. That’s a clear sign the trend is to the downside.<\/p>\n Another piece of bearish evidence is that prices broke below an important support (blue line). This trend line has been a supportive floor for the market since June 2022. Breaking below that line is another sign that investors are still bearish on small-cap stocks.<\/p>\n <\/p>\n Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n It’s certainly possible that the Russell will pop higher for a few trading sessions. But any rally should fail and ultimately draw the index to fresh lows.<\/p>\n For now, traders should avoid getting into stocks that make up the Russell 2000 Index.<\/p>\n My downside target is around 1510. So, there should be another 14% decline before the index can stabilize and rebound.<\/p>\n Happy trading,<\/p>\n Imre Gams<\/p>\n <\/p>\n![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202310\/20231018-JMU-01.png\")
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