Friday, August 11, 2017

RUT Russell 2000 Small Caps Daily Chart; Testing 200-Day MA Support; Lower Band Violation

Remember a few days ago the RUT 50-day MA was highlighted as price battled above and below this key moving average? The Russell 2000 then failed at the 50-day MA collapsing through the 100, 150 and is now trying to find support at the 200-day MA at 1371. Price will either bounce or die from here. Since the battle at the 50-day MA was dramatic and resulted in failure, and the whole stock market rolled over, small caps are exhibiting leadership. A failure of the RUT 200-day MA would devastate the stock market.

Price has violated the lower band and actually gapped below it. That is out of hand to the downside so a bounce will be needed. The middle band at 1421 and dropping is on the table. The initial upside target would be the 150-day MA resistance at 1390. The stochastics are oversold open to a bounce. Ditto the RSI. However, the MACD line and histogram remains weak and bleak wanting another low in price after any bounce. The RUT may perform a jog move up one day, down the next day then up the day after that then trying to print a more substantive bounce.

The RUT 200-day MA at 1371 is a line in the sand for the entire stock market. Bears will create carnage below 1371. Bulls will stage a comeback relief rally above 1371. Price is at 1371 trying to decide what to do.

As a side note, it has been a long time to see negative price action. The central bankers have seriously distorted and destroyed markets over the last eight years. Price discovery is a joke; you really do not know what anything is actually worth anymore due to the oceans of infinite liquidity washing around the world. The oversold conditions on charts are worth monitoring here on out. Usually they are indicative of a bounce ahead for price, however, as bear markets develop, indexes crash from oversold levels. Markets do not crash from overbot levels. Usually what happens is a stock or index becomes weak and drops off the overbot levels and then becomes oversold and just when traders hope for an oversold bounce, thwack, the stock or index crashes. It is something to keep in mind during the weeks and months ahead.

For a sustainable down move in stocks, the bears are going to need weaker utilities but the utes have been holding up well. 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 Monday Morning, 8/14/17, Before Opening Bell: The RUT ends last week at 1374 moving through a range at 1368-1376 on Friday. The 200-day MA is 1370.64. Bulls are trying to use the 200-day for a springboard bounce and relief rally. Market bears got nothing unless they can push the RUT under 1370.

Note Added Monday Morning, 8/14/17, at 10:20 AM EST: Stocks bounce big to begin the week with a robust relief rally. The RUT pops to 1386 with a HOD thus far at 1389. The 150-day MA resistance is at 1390.72 and the 200-day MA support is at 1371.55.

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