FundamentalOverview

The Russell 2000 has beenselling off pretty aggressively since Friday following a series of bad US datareleases. In fact, we got weak US Flash Services PMI, UMich final Consumer Sentiment and yesterday a weak US Consumer Confidence report.

The problem here is thatwe’ve also got inflation expectations jumping to new highs in both the Universityof Michigan and the Conference Board reports. The market might be fearing thatin case we get a slowdown, the Fed might not be fast enough in cutting ratesamid inflation remaining above target and uncomfortably high long-terminflation expectations.

This is something to keepin mind in light of the next NFP and CPI reports coming out before the MarchFOMC decision where we will also get the updated SEP and Dot Plot. Hot data, especiallyon the inflation side, could trigger a deeper correction.

Russell 2000Technical Analysis – Daily Timeframe

On the daily chart, we cansee that the Russell 2000 broke below the major trendline and extended the drop into the 2172low as the sellers piled in more aggressively on the break. This is where wecan expect the dip-buyers stepping in with a defined risk below the low toposition for a rally back into the 2337 resistance.The sellers, on the other hand, will look for a break lower to increase thebearish bets into the 1993 level next.

Russell 2000 TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, there’snot much we can add here as the buyers will look for a bounce into the downwardtrendline, while the sellers will look for a break lower to extend the selloffinto new lows.

Russell 2000 TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that on an intraday basis, if we get a break above the most recent lowerhigh at 2195, we can expect the buyers to increase the bullish bets into the2220 level next. The red lines define the average daily range for today.

UpcomingCatalysts

Tomorrow we get the latest US Jobless Claimsfigures, while on Friday we conclude the week with the US PCE data.