Steep opening slide on tap for small caps

Small-cap stocks are expected to open sharply lower, following a stiff decline in overnight prices, a drop in overseas equities and another rally in crude oil. The Russell 2000 (NYSE:IWM) was off about 0.8% in after-hours trading, and could test two-month lows early this morning. If the overnight trends hold up, then a Russell opening near 716.50 could be seen.

The Russell is testing key chart support from the recent range lows along 717.50. A decisive push through that support zone would suggest that the market has rolled over into a new lower trading range, with the next noteworthy downside target near 690.

In overnight news, United Parcel Service (NYSE:UPS) issued a profit warning and shares in the package courier slumped more than 4%. Soaring energy costs continue to take a bite out of corporate profits, especially those with extreme exposure to fuel prices, such as package delivery companies and airlines.

Crude oil prices climbed back near $139 dollars a barrel overnight, rising in response to rumors that Iran had been attacked. Although the rumors were denied by Iranian officials, crude oil prices remained solidly higher into the U.S. stock market . . .

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