The Next Set-Up: Russell 2000

Do You See It ?

It’s not always what’s happening; it’s also what’s not happening.

‘The curious incident of the dog in the night-time’ … the dog did not bark and so indicated, it knew the killer.

In Steven Van Metre’s Sunday night update (time stamp 5:55), he highlighted that small caps, IWM, (Russell 2000) tracking fund is in a ‘crash pattern’.

We’re going to look at the small caps and see what’s there and what’s not.

Russell 2000 (IWM):

Weekly Chart of IWM

The up-thrust is clear … we can see that.

However, the question is, what’s not happened with this (potential) set-up?

Moving to the daily chart, it shows the up-thrust has not been tested.

There’s no rule that says it has to be.

However, price action shows a spring set-up and retrace in process (below). We also have a Fibonacci target that looks like it might work out.

Moving closer in on the daily.

A retrace to the 62% level, would (could) act as the test of the up-thrust shown on the weekly chart.

That move if it takes place, would create its own up-thrust of the resistance area (below the 62%, level).

On top of that, we may have financial media helping out by getting participants on the wrong side; if so, they’re likely to foment news stories of continued ‘recovery’ or ‘inflation’ moderating … or some such non-sense.

The Media’s Role

In fact, if we get a retrace and the press does not jump on board … I’d be wary of the set-up (not advice, not a recommendation).

Remember what a good job they did with gold … $3,000/oz, is “imminent”, right?

Gold Down, Market Up?

Is that possible?

For starters, the question is what’s called a ‘mind-trap’. A certain way of thinking that causes one to get boxed-in.

The dollar continues its rally and gold appears to still be inversely correlated. We’ll stay with that as the main indicator of GDX downside potential.

Yesterday, it was thought the up-side correction in GDX, was complete … and that may still hold true. Today’s action looks like a minor test (thus far) of that correction.

Note, at this juncture, heavy-hitter, NEM, has posted out-side-down from yesterday’s price bar … hinting that it’s ready to continue lower.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

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