The S&P 500 and the NASDAQ 100 are making new highs, and dancing around round numbers. For the S&P 500 it is 2500. A magic number that has been discussed as a target for many traders for a long time. For the NASDAQ 100 it is 6000. The round number phenomenon is an interesting one in itself but today those sticky points may be what the Russell 2000 needs to catch up.
As the S&P 500 and NASDAQ have been marching up to all-time highs the Russell 2000 has been lagging. It is not far behind, only about 2% off of its highs, but still lagging, like it tired and unable to get out of bed early for the new school year like your kids. But Tuesday showed signs that may be ready to change. The Russell 2000 may be waking up and ready to join the party.
Using the iShares Russell 2000 (NYSE:IWM), as a proxy, you can see the slow grind higher in a channel in the price action from December through August. All was well, but then it broke below the channel and its 200 day SMA. That did not last long as it found support and started higher a couple of days later.
Since that low it pushed higher until making a short term top at the end of August. That top was a lower high and raised concern of a possible trend reversal. Any whiff of weakness and we all know how the punditry react: Crash is Coming!!! The crash shaved 2 points off of the ETF over the next 4 days before a reversal Monday. And then Tuesday it made a higher high. With momentum building and bullish this is a real positive. It also established a target on a Measured Move to over 145. That would be the new all-time high we have been waiting on. Lets see if the Russell can get out of bed and keep moving.
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