Update on RUT: Apr 26, 2022

In our last update [see: Nov 30, 2021 Update on RUT] we noted that RUT had fallen by over 10% and dropped below its 200-day moving average – both bearish developments.

Yet, it had bounced repeatedly at a key Fibonacci level, the 1.618 extension at 2177.88. By repeatedly, I mean seven separate times where it dropped below 2177.88, then recovered back above it.  To complicate things, it had closed that day just above another important Fibonacci support level at 2202.11. In the end, we left members with the simple advice:

If it drops through 2177, then I’d get short with tight stops muy pronto with a new target of 1918.77 (a 22% drop.) Otherwise, watch out for head fakes.

It should come as no surprise that RUT did eventually break down and reach 1918.77, but only after criss-crossing 2177 eighteen more times and rallying 9% into the end of the year. How’s that for headfakery?RUT has now tested its new best friend 1918.77 over and over and over again. Its latest tag occurred earlier today. It closed at 1890.47, within 0.5% of its two previous cycle lows.

Now what?

continued for members


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