RUT: The answer to yesterday's question...

In answer to yesterday's question, the answer is "falls apart like the rest of them."

Yesterday I was amazed at the relative strength the RUT showed in face of the collapse of the other indices. The question was whether it could hold up or not and the answer was a resounding "no."

Tomorrow we get to see if everyone really heads to the exits, or we get a little relieve bounce before another leg down. The RUT is holding on to the 200MA by a thread, but important to note that it was only August in the last 10 months that it was able to stay above the 200MA. With the current intermediate downtrend and the current economic outlook my bias was be for the RUT to trade at or below the the 200MA in October. The DOW, NDX, and SPX are ALL trading WELL below the daily 200MA, and from a pure economic perspective, it would make no sense in the current market conditions for the small caps to have strength when everything else is cracking down. I think we started to see the beginning of the end of the RUT bulltard run today.

There is lots of room for the RUT to drop under this area with some potential support in the 700 area. Just looking at the chart it would make sense for the RUT to drift down to the 700 area to retest and build up a base again before moving up again.
(that's just my observation and not a prediction - just voicing an opinion)

RUT Daily Chart:

Can you notice the start of a classic collapse forming on the daily chart here?

It first started with a strong steep uptrend (Mid-Jul to Mid-Aug).
It then broke below it's steep uptrend line (Aug 19th).
It then found support on the 200MA (Aug 25th & 26th).
It then kissed the back of the uptrend line at 755 and formed a topping tail (Sept 2).
It's now pearched on the top of a long road down to the next new low.