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Chart of the Day: US2000 (Russell 2000)

The US2000 is one chart that doesn’t need too much narrative, and where the bulls simply have to defend the 1455 level — or the risk is we head into the December lows. US small caps have outperformed the larger cap S&P500 since June 2018, which tells a story in itself. And for those who trade long/short strategies, the US2000/US500 ratio sits at the lowest levels since 2009.

Chart of the Day - Aug 26, 2019 - US2000, daily

For those who don’t trade long/short (or “pairs”), if we’re looking at a vehicle to trade pessimism, it generally pays to short the weakest equity index. The US2000 is that index, and a break of strong horizontal support at 1455 would accelerate the selling. It seems the greatest risk to markets is US President Donald Trump’s Twitter account. But after what we’ve seen from Trump in the past few days, a simple tweet that talks are progressing well won’t turn sentiment around. Traders are questioning the circuit-breaker and seeing few answers.

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