Courtesy of Chris Kimble.
I’m sorry if I am getting a little micro this morning, yet I wanted to highlight an unusual single day pattern in the Russell 2000. At the highs in the markets yesterday I posted the chart below and ask if the “Russell 2000 was going to get hit on the head… again?(see post here)
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Let me be clear…one day does not a trend make! Since the markets are in the narrow 8%/Quick draw McGraw channel, I want to share any short-term clues that might be taking shape that could give an edge to the bigger move from the channel!
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In time, odds are low a single day pattern will mean much, yet the single day action at (2) sure caught my attention yesterday. Why? The Russell created one of the larger “upside bearish wicks” in years at falling resistance, drawn from a potential right shoulder. For shorter term investors, shorting at resistance on counter trend rallies remains a good idea until proven differently.
The longer a pattern stays in place (sideways channel) the bigger the move will be when resolved! This pattern will end and as always, opportunities will be at hand on the breakout/breakdown.
