The Russell 2000 has been slamming the bears the last few days. It has made for a very big move higher and pain for those that are short. But even with this move higher, it still leaves the markets short of a recovery. Yes there are good things happening but it is too early to call off the hedges.
The chart below shows the Russell 2000 over the last 9 months. The drop from the top at the end of August has been dramatic, over 16% from peak to trough. and the bounces have been big. This latest move is the most promising for a full rebound, but there are still obstacles to overcome. It is just back to the 20 day SMA. A move over that would instill a lot more confidence. And as I write in the pre-market it is up again.
The good news: momentum is turning. The RSI is out of oversold territory, rising and has made a higher high as it approaches the mid line. This is not out of bearish territory though. The MACD made an extreme low and turned up. It crossed the signal line yesterday which is also a plus, but it remains negative.
It only takes a look left to early October to see another bounce of about the same magnitude that fell short. This one could do the same. For now though the Russell 2000 is showing promise. Over its 20 day SMA and perhaps it can put the broad market on its shoulders and carry it higher.
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