The RUT put in an impressive day today thanks to the help of the homebuilder index that put in a 14.85% gain today. The daily chart shows a nice break of the downward trendline to the upside and a close today at 693.43. If the strength continues tomorrow the index will likely find some resistance in the congestion of the 705 area. Note that if it can clear and hold 705 that it would be pretty significant. Holding above that area would negate the lows of the last 2 weeks and may provide a base to climb back up to the 50% Fib level of 725. First things first, lets see if the RUT can reach and hold above 705 and then we can talk in more detail about the next level.
We are still intermediate bearish as we still have lower highs and lower lows since November 07, but we are watching this current bounce to see where we might find a low risk entry to trade the downside.
Here are the likely resistance areas based on Fibs and horizontal price levels:
- 740 next
- 725 mid
- 705 closest
To be objective we must also remember that the market can do what ever it wants, and it may just climb for the next 3 weeks to counteract the 4 weeks it just spend falling. Lets keep our eyes on the price charts for any hints to help us determine the next likely moves.
RUT Daily Chart:
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