RUT: Bulltards Are Back

One thing I love about the Russell 2000 is that it can climb up market walls that it shouldn't be able to climb up. What does that mean? It means that sometimes it just goes straight up without any pullbacks even when it technically "shouldn't." That's the beauty of the stock market and specifically what I love about the RUT.

Although the pull back on Monday seemed severe and produced a topping-type tail on the daily charts, it ignored the reversal candle and went up today anyway. One thing important about topping tail candles is that they need to confirm -- it did not confirm today.

The Reverse Head and Shoulders Pattern I've been watching is almost complete, it will reach it's target if it can climb to 408. Support levels below will now be 400, 395, 385 and 375.

The grand-daddy, short-term upside target is the 430 area which technically is getting very close now. 430 is just a few more uber-bullish days away. Since the move down from 425 to 405 was a quick and straight shot down, there will be very little resistance up to 425 on the way back up once it can clear 410.

The RUT is currently on a sprint with relatively few pull backs so be aware that once it reaches some of these key resistance levels up top it may take a significant breather before it tries to climb back up again.

What's really happening?
The debate has already started on whether this is a bear rally of a bear flag that was suppose to collapse today, etc., etc.

What's really happening is that the price is moving up and is continuing to move up. It's currently back above the rising 20MA on the hourly chart and that is bullish. Until the uptrend is broken my short-term bias is up because that's what the price is doing right NOW. A bullish pattern is playing out and if the RUT can squeeze out 5 more points tomorrow the target of 408 will be hit.

RUT Hourly Chart:



On the Daily Chart I see more of the evidence that the 430 area is starting to act like a magnet. Notice that this rally has blown past two topping-type candles already and today's action closed above yesterday's highs. As the RUT was falling over the prior six months, the strength of the move was characterized by bottoming tail candles getting blown through all the way down. In other words, the trend was MUCH stronger than the candles and candle patterns. The reverse is now being seen on the way up which shows the strength of this current rally.

RUT Daily Chart: (Note how close the 430 area is)