Russell

Yesterday’s price action was not that convincing, but it wasn’t a slug fest all day so that’s good. The reason yesterday was not convincing of a turn or a bottom is because of the volume. Yesterday’s volume was light, not coming near any volume level we’ve seen in the past as people bought the dip. I would like to see the $SPX close above 1100 and for volume to pick up a bit before I feel confident about this market moving higher.

The $RUT is a totally different story, and I feel more confident about the $RUT right now than any other indices. Yesterday’s price action is very bullish for the $RUT as it created a Doji like candle right on an uptrend support line. If small cap stocks rally the rest of the market will too, but if the $SPX is weak I would guess the $RUT will not be as weak and would most likely outperform in the coming days.

Might Have A Chance

We are having a big up day in the market and the $RUT is above the down trend line I highlighted in an earlier post. A close above this down trend will indicate to me that we might see the $RUT catch up the other indices.

I have a few ideas about what could happen with the $RUT, and most are for more volatility as the index chops around. But one possible scenario is for a head and shoulder pattern. The reason I think that this pattern could form is due to over head resistance as we try to push to new highs. A lot of people just want to break even from last year, and because money is being taken in and out of the market causing us to zig zag into a head and shoulders pattern. Below is a chart of the $RUT.