$RUT Update for 09.21.2008

RUSSELL 2000 INDEX - $RUT

Monthly chart shows market remains stuck in trading range. Aggressive bulls managed to take the index back up to test last month's high. Need to clear this level to indicate higher.

Weekly chart better shows the consolidation range the market has been stuck in since March 2008. This consolidation pattern hints that more downside (to new lower low) is possible. Look to next week's trading activity to determine whether or not this consolidation pattern is complete.

Daily chart shows that aggressive buyers found support off the .786 fib. This occurred right after the announced bailout of AIG. The temporary ban on short selling of 799 financial stocks caused aggressive buyers to gap up the open of Friday's trading session. However, the buyers found resistance at last month's high. Will the bulls be able to continue the momentum upwards, or was the last two day's a dead cat bounce and short covering? Technically, we do have a buy signal/pattern in place, and we need to see follow through next week to the upside, otherwise the consolidation pattern remains in play, and more downside is expected.