The Russell 2000 has been trading strong over the past several months… really ever since the first 2020 U.S. presidential debate back in September. But that’s beside the point I’m trying to make today.
In the past few weeks, it’s been cooling off.
The year 2020 was great for the Russell 2000. However, it was an even better year for solar stocks. But one of the reasons these solar stocks are headed lower is because China is under pressure again, and the majority of these stocks just so happen to be in the Russell 2000 — which is highly sensitive to China.
While the majority of solar stocks are holding some degree of strength, the two solar stocks headed lower we’re going to look at today appear to be trading in a descending triangle, which usually breaks to the downside.
So instead of just talking about it, in today’s video I want to show you exactly what this looks like. That way you can look at all the details step by step, and we can analyze both of these solar stocks that are headed lower.
But before we get knee deep into today’s analysis, let me give you some background…
The point I’m trying to make is that the S&P 500 is moving higher, while the Russell 2000 is sitting at its 50-day moving average and lagging behind.
But why is it lagging?
Well, that’s easy… While the Russell 2000 is technically an index of 2,000 small-cap companies, I consider it to be medium cap. And the majority of its stocks have a huge correlation to China’s economy because many aren’t startups, but rather medium-sized companies just starting to stand on their own two feet.
And a lot of them buy and sell parts to and from China. So in other words, there’s a lot of Chinese impact on these solar stocks.
As a matter of fact, when Former U.S. President Donald Trump announced the trade war with China a few years back, that’s when the Russell 2000 started lagging behind the broader stock market. After the first 2020 presidential debate, when it looked like Joe Biden was going to win the White House, as he did, that’s when the Russell 2000 started to rally.
So let’s take a look at these two solar stocks headed lower in my short video below, and be sure to leave your thoughts in the comments section.
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