Russell 2000 created one of the largest/bearish wicks in years last week (see post here) This wick was up against falling resistance, which was a great place to score on defense in the Russell, by picking up RWM.
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Was this single day pattern important? Yes…as the Russell 2000 fell over 12% following this pattern, which also means RWM made 12%. Last week I shared that more often than not, a single day pattern isn’t that big of a deal, yet I highlighted this wick and bought RWM due to how key it could be.
In falling markets, if you are willing to score on defense, you want to go short/look to score on defense into rallies and this was a prime spot. Historically making 10% a year is the average return on stocks…keep these opportunities in mind, because RWM made 12% in a week.
Keep a close eye on the resistance at (2) in the above chart…it very well could create another opportunity!
John….great question. As a viewer you know I love 2 charts right now, the Russell and the Wilshire weekly. The post yesterday suggesting that if support goes in the Wilshire, investors will jump the fence and head for the hills….that chart is a “Weekly” chart, which still reflects the broadest markets is above support.
600 on the Russell is the 50% level..for sure important!
Thanks John for the question and viewership,
What do you think about the significance of the 600 level over the last ten years to be both support and resistance to the Russell 2000? It blew through the resistance one time — GEI.