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iShares Russell 2000 Message Board

  • keybotthequant keybotthequant Jan 19, 2013 8:35 AM Flag

    RUT Chart Shows Russell 2000 at All-Time Historic Highs

    The RUT prints an all-time high this week as shown by the blue line. Tech and small caps lead the markets so the new all-time high is very encouraging for the bulls. The RUT has been stumbling sideways for a year thru 750-880 and has now broken out to the upside. If the move is not reversed in the week or so ahead, the move will likely continue much higher. Keystone's 80/20 rule says 8's lead to 2's so the closes above 880 now open the door to the 920's. The red and green lines show the positive and negative divergences that create the bottoms and tops, respectively. The action for the last year is sideways with the indicators starting to print slightly higher highs than the September highs, thus, this is a long and strong profile which wants to see higher highs in price after a pull back. The stochastics are overbot, and RSI is near-overbot, and a not-so-large move higher for indicators right now as price moves much higher, hint at further upside, say 900-930, but not excessive upside, say 930 and higher.

    The battle now is taking place between two patterns, either the ascending triangle or rising wedge. The purple ascending triangle is a bullish pattern and with vertical side about 260 handles, a breakout from 880 would target 1140. The orange lines show the rising wedge pattern which is a bearish pattern which expects price to collapse out the bottom and tumble lower at anytime forward. Note that price is at the upper trend line of the rising wedge so the action in the days ahead is key. The bears need to spank price back down to keep the rising wedge in play, and this is likely to occur considering the overbot stochastics. The longer price stays above the 880 breakout line for the ascending triangle, the stronger the bullishness will become and the more likely that the 1140 target will occur in the couple years ahead. Note how the 850-880 area encompasses both patterns and allows the bull-bear fight to continue until one of the patterns emerges victorious. A price move above the upper trend line of the rising wedge will give the nod to the bulls.

    For the RUT chart use search box above for Keystone Speculator

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