Chart in Focus: $RUT

This is a syndicated repost courtesy of NorthmanTrader. To view original, click here. Reposted with permission.

Just sharing some technical observations here, found the $RUT of interest today namely because it is the one major index that seems to struggle with its 200MA. Remember small caps led in 2018 and then completely fell apart with the rest of the market in Q4. While other indices have moved above their 200MA (without a confirmed successful retest at this juncture), the $RUT is clearly struggling at the moment having rejected twice now in recent days:

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Like the rest of the market the rally has been so one directional that a pullback could be sizable when it finally occurs. I’ve highlighted some fib levels that may be of interest. That is of course if $RUT has topped here for which we are currently lacking confirmation.

Indeed on the cash chart one could make the case for a potential bull flag perhaps into OPEX week next week:

Bit of a conflicting signal there as the $RUT’s underlying volatility index has broken out of its wedge. This breakout could possibly be retested and a new high on the $RUT could trigger a negative RSI divergence. So clearly a struggle at the 200MA, no clear reversal evident yet, perhaps a consolidation for new highs.

If a break lower does occur one can see an aggressive upward sloping 50MA which will cross-over its 100MA in the days to come. On any larger pullback these MA’s are likely to offer initial support in their vicinity.

On the weekly chart we see a broken upward trend patterns and an aggressive counter rally now in 2019. The earlier mentioned bull flag, (if it plays) would find resistance in the area of the early 2018 highs and the .786 fib, again likely producing a negative divergence in the process:

Like many of the larger index charts the rally remains untested and shows potential larger topping patterns, but with potential to move higher still before these patters would be invalidated.

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