After yesterday’s baseless mega-rally, it was a relief to see a bit of red this morning. Looking at the small caps, there has been a strong burst since early Friday morning, which appears to have taken a U-Turn at the horizontal I’ve drawn in the middle of the chart, which constitutes the base of the head and shoulders pattern from last week.
RTY 1 Hr Chart
Looking back farther, at a 4-hour chart, you can see the uptrend from March broken, with a topping pattern being hammered out since then. We had a break below this pattern last week, but evidently the misplaced faith in yet another multi-trillion dollar “stimulus” package goosed things higher. I’ve here to tell ya, this once-great republic of ours is going to stimulate itself into oblivion.
RTY 4 Hr Chart
The ES is sporting a similar setup: that is, an ascending trendline from March (now broken) and a fairly recent topping pattern forming over the past couple of months.
ES 4 Hr Chart
Small Cap Stocks Have Taken A U-Turn
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