The Russell 2000 (RUT) rallied for a second day but once again on light volume. There is a declining wedge pattern developing as the index attempts to regain the territory above the 200-day EMA.
The VIX has surprised many (myself included) by returning to its multi-month lows at just 25. The Ichimoku chart highlights the fact that this index has been able to avoid any contact with the pink cloud since April.
Once options expiration is behind us, it will be worth monitoring whether the index can continue its decline below what might possibly be a double bottom pattern.
More often than not I comment on the short side of the long-term Treasury curve which can be traded via the TBT sector fund. The long version for this sector (without leverage) TLT is revealing a mini bull flag formation.
DBB, a sector fund which tracks base metals, looks technically vulnerable.
I'll return to my comment about SPDR Materials Select Sector from Monday’s commentary.
XLB, an exchange traded fund which tracks early cyclicals, is evolving a second bearish flag formation and could be in the process of forming a pattern which I called the downward staircase in Long/Short Market Dynamics.
Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.
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