Like the android assassin, the Russell 2000 appears to be unstoppable, marching from 675 in June, past 825 in mid January. “This market is making all-time highs over and over,” says Dave Toth, technical strategist for Myfuturesonline.com, and the top end is nowhere in sight. “The Russell is in a clear trend, and the only pertinent technical levels lay below the market,” he says. He notes that on Jan. 31, the market took out resistance at 800 in the underlying cash instrument and 812 in the futures market. “As a result of that strength, the market has reaffirmed the secular bull trend and defined two more levels, support at 800 in the cash and 812 in the June futures.”
The corrective low during March would be 785.90 in the futures, which was the Jan. 18 low. “The market has to fail below 800 and below the Jan. 18 level. Then in absolute fact, the uptrend is broken.”
The market is ripe for profit taking, says independent trader John Stevens. “These markets have been strong since August, and the Russell has outperformed all the other markets so far,” he says, but sentiment is changing, and all it’s going to take is a Federal Reserve statement about looming inflation or slowing growth to spark the sell off, he says. For March, he expects a low near 760, with a high of 815.