The Russell 2000 May Be Declaring a Move Higher

Last week I noted that the Russell 2000 was going to be the leader going forward, but it needed to declare a direction. The case was laid out that the monthly chart had been in limbo, moving sideways for the entire year and that a closer look at the daily oscillation in that tight range would set the tone for which direction it would lead.

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Wednesday it took the first step towards declaring that direction to the upside. The chart above shows that the recent bull flag, broke to the upside, with Wednesday printing a bullish Engulfing candle. This bodes for more upward price action in itself. But maybe even more important is that the price action made and closed at a higher high for the first time since July 2nd by closing over the September 3rd high. Oddly, the slight pullback in the S&P 500 may actually be aiding this as rotation sets in. The final test is now to close at a new all-time high and preferably over 121. Keep watching as this approaches and you assess the market’s strength.

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