Small Caps: Rebound or rollover at 200DMA?Near-term price action in U.S. small-cap stocks may be instructive for assessing longer-term directional risks, with the contract trading near the key 200-day simple moving average.
Despite breaking uptrend support and extending the bearish move late last week, buying dips remains the preferred strategy unless there’s clear evidence the U.S. economy is sliding into recession—an outcome unlikely to be resolved near-term with only second-tier economic data on the calendar this week. That also means market pricing for just under 100 basis points of Fed rate cuts by mid-2026 is unlikely to shift dramatically, helping to support risk appetite.
If the contract can reclaim the 200DMA and hold there, longs could be initiated with a stop beneath the level for protection against reversal. 2192 is an early hurdle for bulls with a break of that level opening the door for a run towards 2240 or even 2278.
Alternatively, if the contract remains capped beneath the 200DMA, the setup could be flipped with shorts established below the level and a stop above. Friday’s low and 2133 are obvious near-term targets, with support at 2075 the next downside level after that.
Momentum indicators remain mixed despite rolling over in late July, placing more weight on price action rather than any firm directional bias.
Good luck!
DS
