High Tea Time for the Russell 2000

• Posted by Greg Harmon
• on June 2nd, 2016

The Russell 2000 had a great day Wednesday. In fact it was the highest close this year in the Russell 2000 ETF, $IWM. And it should go out and celebrate with a formal high tea. Why? The Index has triggered a Cup and Handle pattern that could lead it a lot higher. What better reason to celebrate?

The chart below tells the story. After starting 2016 with a strong move to the downside, it drove higher from a February low to the prior high near 115 at the end of April. This built the Cup. A slight pullback from there to 108 in May and a move up out of the falling channel, created the Handle and the trigger. The target on the pattern is a move over 135. That is well over the previous high at 129.03.

The cast of indicators gives its support to this move and backs up more. The RSI is bullish and rising. The MACD is crossed up and rising. And the Bollinger Bands® are opening to the upside. This pattern triggered on a move out of the falling Handle. But even the conservative trader should get on board on the move over 115 to a new high for the year. Tea and sandwiches anyone?

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