The Russell 2000, which had experienced an incredible 48% upside price rally after the November 2020 US elections, has recently peaked near an upward sloping price channel that originated shortly after the 2010 Housing Crisis bottom. The incredible aspect is that the post-COVID price rally accelerated at such an extreme rate that the current peak level (highlighted by the MAGENTA circle on the chart below) represents an extreme rally phase in price. Unquestionably, at this point, the markets are searching for a new trend and the IWM has consolidated into a sideways Flagging price formation.
I believe global traders are currently searching for new opportunities and have taken the past 45+ days to re-evaluate the extent of the post-COVID rally in the markets. Ironically, the IWM and SPY show similar types of extreme rallies to a previous (2009~2010) price channel high. It is the opinion of my team and I that the markets have entered an over-enthusiastic rally phase to reach these levels and are currently stalling while searching for a new trend.
IWM FLAGGING SIDEWAYS – WATCH THE $206 SUPPORT LEVEL
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AFTER REACHING A TREND CHANNEL HIGH, THE RUSSELL 2000 (IWM) FLAGS OUT
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