Markets – Macro – Technicals

RUT

This page tracks RUT (Russell 2000) over time and different time frames. Updates, including different time frames and additional technical subsets will be notified via Twitter and Facebook.

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July 21, 2017

“Fake breakouts cannot be dismissed as a possibility.” The Yellen inspired rally indeed got us to new highs, but oddly enough the structure on $RUT continues to hold as resistance. I have 2 charts here, one of $RUT cash chart which shows an odd open print of 1452 which is not reflected in the futures chart.

Either way the resistance line has continued to hold and new highs again came on a negative divergence. $RUT continues to be constrained in price in this tight channel. Note, again, the underlying volatility index has made a record new low this week, but has bounced since then. It remains our view that this volatility compression will eventually lead to an energy release of size. There is nothing in the markets historic record that supports such extended low volatility.

July 10, 2017

$RUT continues to trade near the top of its now almost 7 month trading range. In process $RUT has formed well defined trend lines that form both support and resistance.

And upside breakout would likely find major resistance at its recent upper trend line and/or the long term trend line outlined on July 2. Fake breakouts cannot be dismissed as a possibility.

One note though is the recent increase in its underlying volatility index. It’s subtle, but given long term compression it is something we are watching. Also note that price consolidation has allowed the moving averages to catch up. These continue to provide support and both the 50MA and 100MA are now close. A break below will invite another move toward the lower trend line. Not until we see a sustained break of the 200MA do sellers have confirmation of a major trend shift which would likely target the lower fib levels/gap fills.

July 2, 2017

The $RUT, like many of the index charts, finds itself inside a multi year wedge pattern marked by extreme volatility compression as higher prices have been reached. Resistance has consistently been found near a trend line dating back to the 2007 highs. Multiple support lines exist as well including one which opens the possibility of a megaphone pattern. Should the support trend line from the February 2016 lows break to the downside then a visit to the March 2009 trend line is a distinct possibility.

Since December of 2016 the $RUT has found itself in a very tight range which suggests an upside or downside event to be in its imminent future.

Volatility on the index is so compressed that a reversion to the historical mean is expected to eventually occur.

A fake out move to new highs above the trend line cannot be excluded as a possibility. Ironically, such a move may bring about an increase in volatility as well.

This combined view of price and volatility indicates high risk of a sizable & sudden downside event at some point in the future even if an upside event were to occur first, which makes this chart a sell strength opportunity in our view.

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