US equity indices took a beating yesterday, with all major Wall Street benchmarks closing over 1% lower. Positive surprise in ISM data can be named as a reason behind poor performance of US equities. Non-manufacturing ISM index unexpectedly jumped from 54.4 to 56.5 in November, while the market expected a drop to 53.1 pts. Solid showing of services sector survey data hints that the Fed still has reasons to continue to tighten policy. As a result, US yields jumped following the release and exerted pressure on equity markets. Small-cap Russell 2000 (US2000) was a top laggard with a drop of almost 2.8%.
Taking a look at the US2000 chart at D1 interval, we can see that the index has recently failed to break above the 1,900 pts swing level and turned lower. Index broke back below the 200-session moving average (purple line) yesterday and tested a support zone marked with 23.6% retracement of the downward move launched in November 2021. No break below this zone occurred yet but the index continues to trade nearby. Should we see a rebound from this area, the near-term resistance to watch is the aforementioned 1,900 pts marked with previous local highs.
Source: xStation5
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