Finally, it's starting to get interesting again. I was so tired of the market moving in the same damn direction with no pull backs to get in.
The little 3 day rally is providing some more opportunities for us now. The price is now sandwiched between the rising 20MA and the falling 200MA -- they are both magnets, but we'll soon see which one is going to win, and it will be one of them.
Because the RUT hasn't had a significant pull back in the last 3 sessions I'm going with the bias that the 20MA will get tested first, BUT the RUT has an army of bulltards that can punch it up 30 to 50 points on any given day despite having any real reason to do so. That's why I'd still give it a 50/50.
The price barely closed over the 38.2 today after tapping it yesterday, so the next upside fib target is going to be the 50% 460 which it could easily hit in a day. There is a downtrend line on the hourly it will have to punch through as well to get to 460, so look for that area to be some strong resistance.
On the daily charts we had 5 days down and now 3 days up -- what will tomorrow bring?
The daily candle body was small today which may be starting to suggest that the rally is weakening.
If the RUT falls tomorrow I'd be looking for a downside target of 426 then 415.
If the RUT moves up, the topside targets are 450 then 460 -- above 460 I start salivating and scaling into some puts. (that is not a suggestion)
The 200MA hourly is will likely be the wall that encourages the RUT to turn around and continue it's downward path. It's what the price does and not what I think it will do that will dictate my trading actions, but with this volatility and the fast movement it's important to start my pre-planning for what I'm going to do if it goes up to point A or what you're going to do if it goes down to point B because it can get there really quick in our current conditions.
RUT Hourly Chart:
SPX Hourly Chart:
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