Russell 2000 Chart ($RUT) June 5, 2009

I’ve been trying to pick an ETF to possibly enter the market with since I haven’t picked a new stock to run with and was watching IWM, a Russell 2000 ETF and saw the chart looked interesting.  That brought me back to the Russell 2000 itself for an exact chart of the index.  I charted $RUT after it closed on Friday at 530.40, down for the day, but up for the week.

After gapping up on Monday and charging above its 200 day moving average $RUT gained on its strength making new intraday highs three of the four following days.  Along with climbing above its 200 day moving average, $RUT also edged above its previous high from the beginning of the year.  (That’s the lower horizontal line I drew.)  The next higher horizontal line marks the intraday high from December 2008.  $RUT stalled the first time it faced the lower horizontal line and could do the same at the higher one when it gets there.  A little below that you can see the 10 and 20 day moving averages.  The 10 day moving average just moved above the 20 day moving average creating a bullish crossover.

Moving to the trend lines of higher lows and higher highs, I see $RUT in the middle of a trading channel that started in March.  The line in the middle of that trading channel shows what was the trend line of higher lows.  That line broke a few weeks ago and is now acting as moving resistance.  The only other trend line I drew starts in February.  It might not be legitimate yet.  The next couple of days will prove its worth.

Williams %R still shows $RUT as overbought, still indicating momentum.  I’ll continue to watch that indicator as another clue to any break that could be more than a dip.  I’m going to wait to see what happens with $RUT closer to 550.00 at the point of the next horizontal line I drew and I’d rather see $RUT at the bottom of its trading channel before I get in.  Once it gets back down and shows support I plan on making a bullish trade on the Russell 2000.  I’m not risking making a bearish trade on it yet since I’ve been wrong for a few weeks about the timing of the market’s demise.