The chart below pretty much says it all. If the Russell 2000 takes out last week’s low it could precipitate an accelerated decline and begin a bear market that could last for many months.
The four primary US stock indices (Russell 2000, Dow, Nasdaq 100 and the S&P) are so highly correlated it is almost certain if one takes out a critical level the others will follow. The Russell 2000 is comprised of 2000 stocks. It is a much larger index than the other three. I always look to the Russell first when determining the meaning of a given price level.
When last week’s low is taken out, and at some point it will be, I will be short.
