October 29, 2009
Shares of iShares Russell 2000 Index Fund (NYSE: IWM) have broken below several support levels.
On Tuesday, October 27 iShares Russell 2000 broke below its 50-day moving average. This is the first time shares have closed below this average since early July. In July, the break below was followed by a rally to new highs.
On Wednesday, October 28, iShares Russell 2000 closed below its most recent correction lows closing at $56.81. Those prior lows were at $58.00 on October 2.
These breaks of short-term support levels point to a test of the 50% retracement support for the July to October advance. This support level is at $55.00 a share. A close below $55.00 would point to a test of the 61.8% support level at $53.16.
Should shares manage to close below $53.16, we will be looking for declines to reach all the way down to the July correction lows at $47.27 a share.
iShares Russell 2000 has had numerous bouts of selling in its March to October advance. All have been short-lived. If any of these support levels holds, there could be a rally and new test of the October highs. But until there is a bullish reversal in iShares Russell 2000, the likely path is to lower lows.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in iShares Russell 2000.
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