A Weekly and Hourly look at the $RUT – Russell 2000
US equity indexes meandered higher while the VIX climbed ahead of the German vote on whether or not the country will contribute to the ECB bailout fund as well as the beginning the two day FOMC meeting tomorrow. (my take on the VIX action is managers are locking in profits from the recent run up as well as shoring up hedges as we sit on 5 years highs)
That being said you have to ask yourself what is your plan ahead of tomorrow and Thursday’s FOMC results…. your plan must include ideas for a sell off and or a rally depending upon the news flow.
The recent Russell run up could very well be profits from the bond run up being put to work in speculative *more risky smaller cap companies in hopes the index as well as its components will catch up to the 5 years highs reached by the SPX and NDX last week. If this is the case and the index does make a new high for the year you should be cautious because speculative capital is fast capital.
When looking at the Russell 2000 chart above, the blue dotted line is clear resistance at the 2012 high of 847.92 with support at 835.55 then 823.30 (redline). The red line is also level which the index gapped over Thursday morning following the Jackson Hole conference speech by Ben Bernanke.
|1 hour RUT|