Russell 2000 Testing Important Support
- Posted by JC Parets
- on June 15th, 2011
The Russell 2000 is down to some pretty important support levels. This Small-Cap index is testing levels where buyers last showed up in March. That rally took the Russell2000 ($IWM) up 12% in about 6 weeks. The previous rally that started from these same levels in January took the Russell up almost 9% in less than a month. Now just because the buyers came with a vengeance in the past doesn’t mean they are going to show up this time. This is just a potential area that we want to watch a little closer to see if the buyers come. If they do, and we will know soon, it can set up for a nice trade with a pretty decent risk/reward.
The upward-sloping 200 day Moving average is right here also. These moving averages often act as a magnet for stocks. So again, just another reason to watch these levels a little closer. The problems start when these levels are breached. Broken Support here could lead to lower lows for the $IWM with next support levels around $74.00. I also would not be surprised to see a little consolidation at these current levels before a rally.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) in 2008 and now actively manages money incorporating Technical Analysis and Behavioral Finance into his practice More
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