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) and is a member of the Market Technicians Association. More
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