Testing Resistance

Posted by Chart of the Day

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For some perspective on the current state of the stock market, today’s chart presents the long-term trend of the Russell 2000 (small-cap stocks). As the chart illustrates, from late 2002 into 2007 the Russell 2000 traded within the confines of an upward sloping trend channel. However, since mid-2007, the trend has been down. Fears of an outright collapse of the financial sector resulted in support (green dashed line) of an already fairly steep downtrend to be breached. As it became apparent that the financial sector would survive, stock prices rose with the Russell 2000 moving back into its original downtrend channel. Currently, the Russell 2000 is testing resistance (red dashed line) of its two-year downtrend channel for the second time since the financial crisis. – Sign up for FREE ChartoftheDay HERE or at http://www.chartoftheday.com/