A key battleground for the new week of trading is the Russell 2000 small caps wrestling with the 50-day MA at 1416. Stock market bulls win big if RUT moves above 1416. Bears win big below 1416. Price was overextended in late July and began to mean revert lower. Note the battle at the 20-day MA that failed, then price plummets to the 50-day immediately.
The 50 failed three days ago and price is now coming back up for a back kiss where it will make a bounce or die decision. Bulls need a rally. Bears need a collapse. The RUT 1212-1216 is a key pivot area that will greatly influence the broad stock market. If price breaks out higher it will seek the 20-day MA at 1428. If price breaks lower it will seek the 100-day MA at 1397. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 2:09 PM: The battle rages on. The bears were celebrating pushing the RUT down to 1408 but the dip-buyers rush in and shoot the Russell up through the 50 at 1416 to the HOD at 1417.42. The bulls were dancing in the streets but then slipped on a banana peel. The RUT sinks back under the 50-day MA at 1415.63 down to 1414. The 2-minute chart was added so you can see the drama up close. One side or the other is going to win and the broad stock market is likely going to follow the small caps. Bulls need RUT above 1416. Bears need RUT under 1415. The 1415.63 is the line in the sand. Price is at 1413.86. The beat goes on. Note the mini textbook inverted H&S (thin brown lines). The head at 1408 and neckline at 1411 targets 1414 after the neckline was broken, which was easily achieved. The market bears should be happy that price came up to back kiss the 50-day since it closed up its loose end, and if it decides to head lower, it may collapse in force since price will be fully committed to move lower after the 50-day is officially lost.
Note Added 2:55 PM: The RUT is at 1415.10. The 50-day is 1415.64. And the beat goes on.
Note Added 3:18 PM: The RUT is at 1415.47. The 50-day is 1415.65. A game of pennies. It is time to bounce or die. What say you RUT?
Note Added 4:38 PM: The RUT ended the session at 1414.17 so the bears win a battle. A new battle begins tomorrow. The RUT 1415.63 drama continues.