Today’s harsh reversal could be viewed as a single day setback were it not for the weekly pattern in the $RUT that continues to track very closely the 2011 pattern we discussed in recent days and weeks. As markets continue to be extremely stretched with complacency still very much abundant this chart acts as a red flag with the turn in the weekly RSI in particular raising the noise level:
The week is far from over, but along with reversals in the other key indices today further downside in the days to come would not surprise. A repeat of the pattern, or at least a rhyming of it would indicate a week or two of backing and filling with a bias toward the downside before a massive acceleration by breaking the weekly 50MA and an eventual touch of the 150MA which would present a likely buy opportunity for a 4th quarter year end rally.
Categories: Daily Market Brief