In our Mar 8 update [see: RUT – How it Got Here, Where it’s Going] we noted that VIX had been particularly sensitive to VIX’s machinations.  In the throws of an analog at the time, we suggested RUT might be nearing a turning point.

At some point, probably around Mar 14, VIX will plunge below [support], thereby driving RUT up to or through the .886 at 1595 or to new highs.  If the analog holds, it might run out of steam [there.]

As it turned out, RUT topped out on Mar 13 at 1609.05, slightly above the .886 at 1595, and dropped back to the support of its 200-day moving average.  It enjoyed the journey so much, it has made two more runs — each within about 1% of the January high.With SPX backtesting critical support today, could RUT be coiling for a breakout?  Or is it about to run out of steam again?

continued for members…

As we noted in our earlier post, SPX is backtesting its 2.24 extension.  If it holds, all is well in Bullville.  If not, we’re in for a bumpy ride. Much will depend on VIX, which yesterday backtested its purple channel top.There are a number of charts that suggest RUT has run its course, including momentum…

…and, RSI — which also shows negative divergence and indicates at least a minor selloff.

Bottom line: with a breakout just 1% away, and VIX fully capable of sending RUT higher by at least 1%, this is a particularly treacherous point to commit to a directional bet.  RUT was “engineered” to this point in price/time.  If TPTB can figure out a solution to elevated inflation that doesn’t involve higher interest rates, then new highs are a possibility.  I remain skeptical, however, and see the failure to make new highs as fairly bearish.If it can break out, the upside remains the 1.272 at 1664 and the 1.618 at 1726.SPX certainly isn’t showing its cards – other than to confirm that 2703.62 is vitally important.GLTA.