I saw plenty of discussion about the weak spots in the market of late. However, I saw very little, if any, talk about the cup and handle bullish daily chart setup in the Russell 2000 Index, which I discussed in my video recaps this week. Here is the link to yesterday’s discussion.
The high beta nature of the small caps forces me to respect the action happening in the Russell. As you can see on the updated daily timeframe below, all of the grinding price action over the past month has been for a good cause as this larger pattern has been formed. Today, we are seeing a strong breakout higher from the setup, on top of the bullish divergence to the Dow I talked about in my prior post.
To state the obvious, bulls now want to see this breakout hold, even if we do see a retrace down to the breakout point tomorrow or next week. For now, though, the breakout should be respected as a quite possible start of a fresh leg higher for the small caps are putting in their dues of late.
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