In 5 hours that price action took the daily chart from a classic resistance at the downtrend line to a chart that now is confirming a higher low and may attempt Monday to put in a higher high. The price will need to close above 473.14 in order to put in this higher high. If it can do that, the next fib target on the upside would be 482.14. I mention that fib level as a target since the price seems to be latching on to those levels. On Friday the RUT closed just .05 from the 50% fib of 461.14 (461.09 was the close).
News wise, the economy is in the worst shape since the depression and most would argree that it's going to get much worse before it gets better. The important thing to remember is that the market doesn't care. The market will continue to trade technically because price is based on human behavior.
There is a reverse head and shoulders pattern (bullish) forming on the broad markets and if the neckline is broke this is a very high probability pattern to trade, despite it's going against the intermediate trend and going against the fact that the economy is in terrible condition. We'll continue to watch this pattern form.
Earlier this year the DOW Transports Sector Index formed a similar reverse head and shoulders pattern and it played out perfectly despite a slowing economy and rising oil prices -- those were external factors that logically went against any sort of rally, but the price moved up anyway. Remember that the market doesn't have to be logical, just watch what the price is doing. Eventually common sense prevails in pricing but usually after making some crazy gyrations.
RUT Daily Chart: Reverse Head and Shoulders Pattern forming
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