This is a finer point but one worth noting considering that on first glance this small cap index almost appears to be taking on a near-term bullish look relative to the increasingly bearish-looking Dow Jones Industrial Average and S&P.
The reversal in question is of the Russell 2000’s one-month uptrend as shown by today’s downside breach of the third Bear Fan Line stemming from this month’s low. It provides an early and strong signal of a bearish sideways swipe to the downside for all of the equity indices and something that may prove to be of help to all of the near-term tactical traders out there.
When viewed in the context of a six-month chart, the message becomes more serious with the Russell 2000’s drop below its second one-month Bear Fan Line having started a confirmation of its most recent Rising Wedge while it is a very nice Double Top that supports a whipsaw not just to the bottom of this year’s sideways trend but right through it and toward the bottom of last year’s sideways trend.
Naturally all such bearishness is supported by the Russell 2000’s more than year-long trend of lower lows while the Double Top confirms at 765 for a target of 703 and a level that would reconfirm the Operation Twist Rising Wedge for a target of 602.
Unless the Russell 2000 can break the lower lows shown above, its Rising Wedges and various topping patterns should be taken quite seriously with a possible move toward 602 quite attractive relative to the alternatives offered by this index’s three-year Head and Shoulders pattern that has been detailed in many other notes.
It is for this reason that it is probably worth paying attention to the fact that the Russell 2000 is reversing down.
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Russell 2000 Is Reversing Down
Published 08/31/2012, 08:44 AM
Updated 07/09/2023, 06:31 AM
Russell 2000 Is Reversing Down
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