Chart Of The Day: Small Caps Setting Up For A Big Jump
Investing.com | Aug 23, 2018 00:01
Yesterday, even as the benchmark S&P 500 failed to hold on to record levels, the Russell 2000 hit a new closing high. Since the start of the US-China trade spat, we've repeatedly pointed out that small cap stocks have been best performing market segment, because of their domestic focus.
This has provided the Russell 2000 index with immunity from the still brewing trade war. Yesterday's fresh high provides yet another bullish signal for the index.
Alongside its record close, the small cap index completed an ascending triangle, bullish in an uptrend. This pattern indicates that the supply-demand balance within the uptrend, which reached a partial equilibrium when the advance halted as buying pressure kept inching into seller territory, has again tilted in favor of demand and the previous uptrend.
Both the MACD and the RSI confirm the price breakout. The MACD shows that different price averages are also bullish, as the short MA crossed above the long MA. The RSI provided an upside breakout to an ascending triangle in momentum, to mirror and support the price impetus.
However, beware of a bull trap. The full extent of the penetration was shy of 0.9 percent, not even satisfying an aggressive, 1.00 percent filter.
h3 Trading Strategies – Long Position Setup/h3Conservative traders should wait for a 3 percent penetration to the 1708.10 top, holding on for a return move that confirms pattern integrity, with at least one long, green candle engulfing a preceding red or small candle of any color.
Moderate traders may be content with just a 2 percent filter and might wait for a return move but not necessarily to confirm the uptrend, rather for a better entry.
Aggressive traders may go long with just a single percent breakout.
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