That the U.S. stock market lacks direction may be the understatement of the quarter.
This lack of direction can be seen:
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On a daily basis: Today for example the Dow Jones (NYSEArca: DIA) is up, the Russell 2000 (NYSEArca: IWM) is down.
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On a year to date basis (the Dow, Russell and pretty much every other index show no net progress since the beginning of the year).
With so much overlapping seesawing concentrated in a tight range it’s tough to spot any kind of ‘must hold’ support or resistance.
The Russell 2000 chart shows the most compelling support level we’ve seen in a while.
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The Russell 2000 (Chicago Options: ^RUT) is at the bottom of a 15-month trend channel
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The Russell 2000 is just above Fibonacci support going back to 2002
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The Russell 2000 is just above a short-term trend channel
For the remainder of the week, this support cluster spans from 1,175 – 1,165.
As long as the Russell 2000 stays above support, the bullish options deserve the benefit of the doubt.
Trade below triple support will caution of lower prices.
What about higher prices? Could any new high (or a breakdown) mark a major top?
The following article has more details: Is Investor Sentiment Bullish Enough for a Major Market Top?
Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.
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