RUSSELL 2000, S&P 500, USD/MXN and USD/CAD – All in Focus for Thursday

Russell 2000 Technical Analysis

I will be watching Russell to see if the 2,600 level holds again. It looks like we are a little soft early in the day, but I like to use the Russell not so much as a trading instrument, although I have done that, I like to use it as an indicator of risk appetite.

There are 2,000 fairly small companies in this listing and the general correlation is that if this index does well, then the larger ones typically do well also. Russell 2000 is typically more bearish in general. If we get a pullback in one of the other indices, many times the Russell 2000 will struggle.

I am watching this 2,600 level. I would love to see a little bit of a pullback here and a bounce because, even though I could buy this, it leads me to other indices in the United States such as the S&P 500.

S&P 500 Technical Analysis

The S&P 500 could give you a little bit of a heads-up that the 6,840 level continues to hold. If we break down below 6,840, then 6,800 would be a major support level as well. Keep in mind, we are navigating earnings season, and part of what we have seen is a drift away from the AI narrative.

I suspect artificial intelligence will be something that continues to be lackluster, at least in the short term, and there will be a lot of questions as to whether or not we need to value it so highly. That is part of what is going on here right through this earnings season.

More of a sideways action, I expect here. I look for pullbacks, I buy those pullbacks, try to find some value, and maybe get out. But if we can break above 7,000, then it really starts to take off to the upside.

USD/MXN Technical Analysis

The United States dollar against the Mexican peso, I am watching this one as well. I would say that the 17.5 level is an area that I want to see challenged and hold as resistance. Are we in the midst of forming a bearish flag? It is possible.

If we are, then we could see a move basically of an entire peso. So, we are talking about 16. That would be a fresh low for the last 5 or 6 years. I think the carry trade is very much alive. If you do not trade the US dollar against the Mexican peso, you can trade other carry trade pairs, maybe the South African rand, the Hungarian forint, or Polish zloty.

USD/CAD Technical Analysis

Finally, I am watching the US dollar against the Canadian dollar, and I am looking at this little area just above the 1.37 level. If we can break 1.3750, I think the dollar takes off towards the 1.39 level.

If we show signs of a big exhaustion candle, then it is a nice selling opportunity down to the 1.35 level. Keep in mind the Canadian employment numbers come out on Friday, so maybe there will be a little bit of front running here.

I do think that we just hit a major bottom in the area of 1.35, at least for the time being. As things stand right now, we are at a point where the US dollar has to prove itself, so watching this pair is going to be very interesting.

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