Wednesday, May 21, 2014

Risk On, Risk Off, Risk On...

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The Russell 2000 sliced through the neckline of a head and shoulders pattern with heavy volume on Tuesday only to snap back with anemic volume on Wednesday.  The weekly chart shows what appears to be an oversold condition.  However, the monthly chart shows this index with lower highs and lower lows having just come out of an overbought condition.

The daily fluctuating risk on / risk off environment is evidence of a market churning at current levels, as neither bulls nor bears have been able to establish control of the market.  I would expect some hint of resolution one way or the other by week's end.

Russell 2000 daily chart:
Russell 2000 weekly chart: 
Russell 2000 monthly chart: