Analysis of Small Cap Stocks and Tech Stocks Amid Market Volatility

Small cap stocks, as represented by the iShares Russell 2000 ETF (IWM), have recently hit their lowest levels since President Biden’s election. This drop has seen the small cap index break below both the 23-month low and the 80-month low, signaling potential trouble ahead for the market. Michele Schneider, Chief Strategist at Marketgauge.com, has pointed out that this could be a recessionary indicator, as historically, such significant drops in small cap stocks have preceded economic downturns.

In a recent interview on Yahoo Finance, Jared Blikre and Michele Schneider analyzed the charts for the S&P 500 ETF (SPY), Nvidia (NVDA), and the Russell 2000 indexes. The S&P 500 has seen a decline below the key level of 4,200, but there are signs that the selling pressure may be easing, with potential support levels around 417 to 420. However, the Russell 2000 has experienced a more severe decline, breaking key moving averages and indicating a potential recessionary environment.

Looking at individual stocks, Nvidia has shown signs of weakness, with a possible head and shoulders pattern forming on the chart. The semiconductor industry, represented by Nvidia, has been under pressure due to concerns about China and overall market hype. If Nvidia continues to fill the gap on its chart, it could signal further downside for the stock and the sector as a whole.

Overall, the current market environment is showing signs of stress, particularly in small cap stocks and the semiconductor industry. Investors should be cautious and closely monitor key support levels and technical patterns to navigate the market effectively. The recent declines in small cap stocks and tech stocks could be a warning sign of broader market weakness, and it is essential to stay informed and prepared for potential downside risks.

For more insights and analysis on the current market conditions, you can watch the full interview on the Yahoo Finance YouTube page or catch the full episode of Yahoo Finance Live for in-depth coverage of the latest market developments. Stay tuned for updates and expert opinions to make informed decisions in this challenging market environment.