Russell 2000 Makes All-Time Highs
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
While the fiscal cliff and debt ceiling limit have received much of the financial news, the small cap Russell 2000 Index has moved to new all-time highs without much fanfare. The Index first traded at the 856.00 level back in 2007, before retreating 60% in 2008 and 2009. Then the Index rallied back, posting a high of 868.00 in May of 2011; before succumbing to another break of roughly 30%. But the Russell has come back yet again, and last week posted a new all-time high of 880.47.
Below is a weekly bar chart of the Russell 2000 Index. The white horizontal line represents resistance at the previous all-time highs. You can see how the market has recently pushed through that level, but I'd like to see a 3% penetration through a level of this significance before I declare resistance has been breached. A 3% penetration through the previous all-time high of 868.00 would have the Index at 894.00. The market's major support rests at the red support trend-line, which would probably lie somewhere between 750.00 and 800.00, depending on the slope of any potential future down move.
In closing, note that if the market were to either reverse lower or trade sideways, the converging major support and resistance levels could pressurize the market. In other words, as of today, major support at the presupposed level of 800.00, and resistance at the new index high of 880.00, are merely 9 percentage points apart. Meanwhile, the Russell 2000 Index has had daily trading ranges as high as 10% during the last several years. These converging levels could lead to a volatile and substantial break-out, either way.
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Preferred planning concepts, LLC & Cambridge are not affiliated.
© 2012, Dominic Cimino of Preferred Planning Concepts, LLC (You can explore the services offered by Preferred Planning Concepts by viewing us on our website at www.ppcplanning.com) Any redistribution, reprinting, or reference to this chart or content is allowed so long as reference to the author and source is acknowledged.
Please be aware that this is not a recommendation to purchase or sell any security. This is not a recommendation for any individual or institution to alter their portfolio holdings. Every individual or institution has its own risk tolerance and investment objectives and perspectives.
Any above opinions of the author should be viewed as such. These opinions in no way represent any type of guarantee. Realize that if you choose to invest in securities, investing in securities carries with it uncertainty and the risk of loss of principal. Lost investment opportunity is also a possibility. Investing in securities carries no guarantees.
Past performance is no guarantee of future results. The price movements within capital markets cannot be guaranteed and always remain uncertain. The above opinions are meant to stimulate thought and should be viewed as such. You are encouraged to discuss these views with your representatives if you have any questions or concerns.
Any indices mentioned are unmanaged and cannot be invested in directly.
It must here be mentioned that technical analysis offers no guarantees of future price movements. Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain.
Neither Cambridge Investment Research nor Preferred Planning Concepts is responsible for the accuracy of content provided by third parties. All material presented herein is believed to be reliable but we cannot attest to its accuracy.
All charts presented were made available by eSignal, a charting service available to individuals or professionals. Anyone interested in exploring the potentials of eSignal should give us a call.