The markets bounced higher last week and small cap stocks were one of the beneficiaries. The Russell 2000 IndexÂ (RUT) had a big week and is back testing its highs. So itâ€™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 retreatingÂ 5.0 to 5.5%. Â 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 thatÂ the Russell is still well within a strong uptrend channel.Â Thereâ€™s still room both ways, but the channel is bullish, as is the current setup.
Russell 2000 (RUT) â€“ 17 Year 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.Â 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
Thanks for reading and always use a stop loss order !
This article originally appeared on See It Market