The positive response to the May labor report on Friday should mark a watershed in terms of improved confidence after the downturn in stocks on 5/22. Media report expectations of the Fed tapering asset purchases starting sometime from September to December, and firm risk appetite overnight indicates the crowd is comfortable with that scenario. Across stock index futures, the mini Russell 2000 contract is outperforming. At miAnalysis, I’ll be watching IWM (iShares Russell 2000 Index Fund) or UWM (ProShares Ultra Russell 2000) this week.
The daily chart shows the mini Russell contract tracing out a bull pennant since 5/22. This is a tight bear channel within an uptrend that characterizes a period of controlled profit taking. Once the profit taking completes, the uptrend resumes. Turning over to the 120-minute interval chart, you can see that an upswing since last Thursday is extending. And momentum confirms the rise, as seen in RSI averages. Price faces a ceiling at 995.70. Against the backdrop of the bull pennant, this is more likely to act as a speed bump than a road block.
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