The Russell 2000 (^RUT) came down even harder than the rest of the market in yesterday's turmoil and also plunged below the 200-week EMA.

The break of trendlines and the overall technical condition looks ominous in the longer term, but I suspect that we are reaching close to an area where the bears may get ahead of themselves in their enthusiasm.

Looking across the chart, the 680 level is an area of price and value support and although we may still see some further downdrafts I would expect to see an effort to stabilize near current levels.



Yesterday's session also provided the first real evidence of acute fear in 2008 as revealed in the VIX (CBOE Volatility Index) .

We have not spiked back to the mid-August level, but we have seen the directional breakout from the triangular formation that I discussed on CNBC earlier this week.

The break to much higher levels suggests that we may be getting closer to the selling climax from which some attempts to mount a meaningful rally might arise.



One further piece of evidence that the level of anger with, and rejection of, equities is reaching a climax is to be seen on the chart for the Dow Jones Utilities (^DJU) which may also be able to find potential support in the neighborhodd of the 200-day EMA.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market. He specializes in market neutral investing and and is currently working on a book about the benefits of trading with long/short strategies, which is scheduled for publication later this year.

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