What They're Not Telling You About The Russell 2000

By Unknown Wednesday, October 1, 2014
The Russell 2000 has experienced some serious technical damage over the past few weeks. From the recent death cross to the large breadth of selling to the downward sloping moving averages, it hasn't been pretty and the move has picked up a lot of traction with financial media outlets. Today the media was hyping the fact that the Russell officially entered correction mode after dropping 10% from its all time high posted back in July. Here's one signal from the Russell 2000 that the media isn't telling you about, and we feel it is quite significant, and may signal a dead cat bounce at the very least. Two words: triple bottom.

After a massive 2013 run up, we believe the small cap index is utilizing 2014 as a period of consolidation before attempting to grow legs and make another run higher. The Russell is taking a breather, this is normal after such a monster run. The index has developed a triple bottom, which is bullish for the long term (if it can hold, that is), and confirms actual consolidation is taking place. While the lagging performance of the Russell 2000 is being hyped by the financial media, and for that matter, when anything is being hyped by financial media outlets, it is wise to take a step back and look at the bigger picture. So let's do that.

We see consolidation, and we see what everyone in panicking about as a tiny blip on the radar. The Russell has broken the 50 day before, consolidated for a bit, and then continued its uptrend. That's how it works in a bull market, we're in a bull market, and we don't believe an Ebola scare or Hong Kong tensions is going to mark a top in this bull market.

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The Wall Street Fox

The Wall Street Fox utilizes fundamental and technical analysis to generate investment ideas. TWSF holds a MBA, and is currently preparing for the Chartered Market Technician (CMT) designation.

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