 Good morning and welcome to the chart of the week video with me David Madden Today's date is Friday the 16th of October 2020 and the time has just gone 1129 British summer time and this week's chart of the week is the US small cap 2000 as we call it on our platform. You might know it as the Russell 2000 If you take a look at the wider trend, we can see that since mid to late March, it's been a solid upper trend Major rebound witnessed just like many other many other Global stock markets and particularly US markets But if you take a look at the the highs that we achieved in October Didn't actually retest the highs of the particular pre-pandemic era So we haven't pulled back all the all the all the ground that was lost before in because of the pandemic And even if you go back further, we notice how The highest that were achieved in January 2020 or early 2020 Weren't even the all-time highs because they were achieved back in August 2018 So it's coming from a relatively low base It's possibly because the likes of the likes of say the S&P 500 and obviously the NASDAQ 100 have very high tech Components where the small cap market Isn't as influenced in relation to those stocks But nonetheless, it's been pushing higher the last few the last few last few weeks We can see here that in the middle of October not that long ago It it hit it's a multi-month high it hit the highest level. It's seen basically since February So it hit it and hit a eight month high We can see here in the last couple of sessions We're an aggressive move to the downside only only yesterday But notice how the body of this candle here completely engulfs the body of yesterday's of the candle on Wednesday So that is quite bullish in itself. The long wick on the candle here denotes indecision So it seems that you know, we had a couple we had a multi-month high We had it we lost ground Tuesday Wednesday. We sold off an early part of Thursday only to rebound That that's that that's quite a quite bullish. We are Indicating to be pushing on higher yet again So if we do press on higher from here, we could be looking at retesting Wednesday's high in around 16 1653 I should we go beyond that and you know, we would then be hitting fresh multi-month highs And then we could be heading up towards 17 hundred and beyond that We could be looking at retesting the highs achieved in early January in around at 17 12 If you do though Drift lower and I've moved to the downside support could be found from this area here 1600 you know, it's kind of a big number notice how that the 1600 zone But just north of it back in the middle of August acted as a resistance on the way up So as early as it's hardly a shock that acted as support only only yesterday If we do have a break below that we could head back down toward this zone here down around 1573 we saw some consolidation in that in the price in that in the zone In the kind of early early part of the month in early October I'd also acted at resistance in the middle of September and even if you go below that We could see support couldn't play from this blue line here. We can notice on a few occasions In the last few months that this blue line the fifth of the movie average acted as a support And if a metric is actually as support in the past it makes it more likely It will act as a port in the future although there are no guarantees and that comes into play in a 15 57 Now if you're gonna be trading the Russell 2000 these the US small cap 2000 It's worth your while noting noting what's going on another US indices So we can take a look at the SN at the we can notice here on the small cap the US small cap 2000 it's not too far away from a small to a month high and it's going to be above its fifth Today moving average whereas if you take a look what's going on on the S&P 500 It's a similar situation the highs that were in act the highs that were achieved in October Granted didn't take off the highs a retest the highs of September which were an all-time high But the highs but the highs that we achieved at the beginning of this week not too far away The all-time highs the S&P 500 is comfortably above this blue line here Which is which is it's 50-day moving average and the reason why I'm talking about this is because of doubt theory One of the tenants of doubt theory is that the averages must confirm each other and that essentially means markets that are quite similar you in this case to us stock indices if they're quite if they're they they should in theory Should be kind of moving in the same direction at the same time or if you're licking if you think the S&P Russell 2000 is going to continue to press higher It's likely we're going to see a positive move as well on the S&P 500 Where whereas if both indices and review lower you can then become more confident that the Broader team and equities is going to be to the downside. So if you are going to be trading The Russell 2000 I would keep an eye on what's going on with the S&P 500 Also in terms of in terms of Economic indicators today in about two hours time at 13 30 British summertime We have the announcement of US retail sales and that's going to give us a good indicator of what demand is like in the US So we could see some addition of volatility on the back of that That's all from this video. Thank you for listening. Have a good trading week and good luck