Sunday, May 02, 2010

Small Caps - Bearish Formation



Above is a 60 min chart of the Russell 2000 index (small caps) with about 6 weeks worth of price data. As you can see we now have a head and shoulders pattern which was confirmed during the last hour of trading on Friday  when stocks dropped precipitously into the close.

If you measure the height of the pattern and subtract it from the neckline, you will arrive at a downside target of approximately  692.

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