RUT Russell 2000 Small Caps Daily Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation

The contrast between the Russell 2000 small caps daily chart and the S&P 500 daily chart is interesting and worth exploring. The red rising is an ominous pattern. The red lines show negative divergence as price makes new highs so RUT is out of gas. The upper band was violated at 1591 so price should venture back to the middle band at 1558.

Watch to see if the RSI prints a lower low, or not, and also if the RSI and stochastics drop under the 50% level into bear territory, or not. That will indicate the strength, or lack thereof, of the downside.

The purple box for the ADX shows that the uptrend in October and November was a strong trend but that petered out in December and the move higher in the small caps now is no longer a strong trend.

The bottom rail of that rising wedge pattern is key. An all-out collapse can occur if that trend line is lost at 1574-ish. If that fails, price will likely collapse directly to the middle band at 1558-ish. The RUT daily chart is far more negative than the SPX daily chart that still displays the long and strong MACD line. 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.