Russell 2000 Battle Continues to new 4 Week Lows

Over the last month of trading, our analysis of the major averages largely focused on small cap stocks and Russell 2000 index ($IWM) due to its extended sideways consolidation pattern.

We broke out above 10 week resistance in early February but we had a difficult time finding follow through from that break out.

We spent the entire month trading tightly in between 138 and 140, and last week we had a bearish outside reversal candle as we saw a new all time high followed by a sharp reversal and close near the lows.

To add a little more discomfort to the bulls, we kicked off this week with follow through lower, breaking back below prior 138 resistance and trading into our old extended 10 week sideways range.

If you’re a bull, you really want to see the Russell 2000 get back above 138 as quickly as possible.

As of March 6, 2017 the Russell is up approximately 1.85% meanwhile the S&P500 is +6.17% and the Nasdaq 100 is up +10% on the year.

Members and I are currently short the Russell 2000 via $TZA from Thursday of last week and did book some partial profits earlier today.

Thanks for reading and good luck out there.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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