Will the Russell Catch Up?

September 26, 2006 · Print This Article

The Russell 2000 (IWM) has been mired in mediocrity the last few days as the other major indices have move rallied higher. The lacking performance in the Russell has kept the index in a neutral stance as the other big three move firmly into an overbought position.

After the strong bounce off of strong support areas yesterday the S&P, Nasdaq 100, and Dow have not looked back. The bullish move has been quite amazing to say the least and should allow the month of September (historically the worst performing month in the market) to finish in the black. An anomaly to say the least.

Where do we go from here. Certainly the bulls have had much of the control over the last few months. All of this bullishness has left the VIX (fear gauge) near a historically low level (closed at 11.53 today). Furthrmore, DIA and the S&P are at strong resistance right now…just a few (among several) that signals a short-term decline is not far off. I stated yesterday, that I plan on waiting until all of the major indices move into a “very overbought” position. I plan on sticking with that although I might make an acception if IWM can push firmly into an overbought position. I will have to make that decision when and if the time comes. Watching from the sidelines can be a wonderful thing sometimes.

RSI (5) Wilder for September 26, 2006