Russell 2000 Riding Its Bullish Channel Higher – RUT

The markets bounced higher last week and small cap stocks were one of the beneficiaries. The Russell 2000 Index (RUT) had a big week and is back testing its highs. So it’s time to take a look at what my Fibonacci method is saying.

Since that time, the Russell, as well as the Dow, NASDAQ and the S&P 500 all reached resistance levels where they would either break out and continue to move up or pull back and do some back-filling. The latter occurred with each indice retreating 5.0 to 5.5%.  Use this article from January, 2015 for reference.

So where are we now concerning the Russell 2000 ? Let’s take a look a some charts and see. I’ll start with a 17 year, weekly overview to show that the Russell is still well within a strong uptrend channel. There’s still room both ways, but the channel is bullish, as is the current setup.

Russell 2000 (RUT) – 17 Year Weekly Chart

Russell 2000 Index, weekly chart

Russell 2000 Index, weekly chart


 

Now lets zoom in much tighter and see what Fibonacci is telling us. In the weekly chart below, you’ll see price moved up to a point that created a new weekly target of 1229.

This is also a great opportunity to see that in October, 2014 price pulled back precisely to the lower line of the up channel and then moved up an impressive +17.39%.

I’ve highlighted in yellow three previous highs that the Russell will need to clear in order to reach the target of 1229. A solid close above those levels is what you want to keep an eye on for now. If we see that, it will foretell of higher prices for small caps.

I still maintain a “13 handle” on the RUT in 2015.

Russell 2000 (RUT) 18 month, weekly chart

Russell 2000 weekly chart. Target = 1229

Russell 2000 weekly chart. Target = 1229

Thanks for reading and always use a stop loss order !

Dave

This article originally appeared on See It Market

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