Did You Know the Russell is close to New 2008 Highs?

Aug 12, 2008: 10:00 AM CST

In something that may have escaped your attention, the Russell 2000 Index is mere points from making a new price high for 2008 – which may be a little hard to believe until you actually see it… so let’s look!

Russell 2000 Weekly:

The chart I have was taken from data from Monday’s close, but notice that as of that point, the Russell was less than 10 points away from surpassing its recent highs to make a new price high for 2008, which may seem extraordinarily shocking, given the amount of bad news that seems to plague the market (subprime, housing crisis, Freddie Mac, recession, etc).

The Russell is made up mostly of small-cap stocks, which actually have been doing well this year, despite the weakness in the Dow and S&P.  This is perhaps an encouraging sign for the bulls, but it’s a development that needs to be monitored closely.

I thought I would point this potential development out, as it stands as a bit of good news in a sea of bearishness.

7 Comments

7 Responses to “Did You Know the Russell is close to New 2008 Highs?”

  1. Anonymous Says:

    The R2K rally of March-May was mainly a result of energy companies carrying the index. When the R2K was re-balanced in June, many of those names moved into a higher market-cap index. Of course, those same energy names would be a drag on the index if the re-blance did not occur. Also, many of the names that moved into the R2K during the re-balance were small banks that have since “rallied” off the lows.

    Interesting.

  2. gamma Says:

    Their is something quite deceiving about the Russell 2000. See you at the bottom…

  3. Dave Says:

    On the other hand, we can just as easily be seeing a double top.

  4. Richard Says:

    The Dollar Rally ended August 12, 2008, and the Russell 2000, IWM, will be turning lower.

    The Russell 2000 has has been up 12% since 7/13/2008 compared to 6% for the Nasdaq, and 4% for the S&P, and Dow as, it is comprised of small US companies highly influenced by the finanical sector which rose on July 14, 2008 as the yen carry traders sold oil and bought the banks.

    The EUR/JPY has turned down, and just today, August 12, 2008, the USD/JPY turned down.

    Lacking liquidity from investing long via 0.5% interest loans from the Bank of Japan disivenstment will be coming out of all stocks globally.

    The yen carry traders will be selling the financial sector to take profit and the Russell 2000 shares will fall rapidly.

  5. Corey Rosenbloom Says:

    Anon,

    That puts it into greater perspective – I was amazed at the strength of the rallies in the beaten down financials and should have looked closer to see how many were part of the Russell. It could be part of a very bloody short-covering rally gone wrong in the end.

    Thank you for providing this info.

  6. Corey Rosenbloom Says:

    Gamma and Dave,

    I think there’s a good chance you might be right – retesting the high is important only if price breaks above that high – as of right now, price failed to make it to the prior high and is now (Tues & Wed so far) failing and could be heading lower, setting up that double top play.

  7. Corey Rosenbloom Says:

    Richard,

    I’m starting to see the undue influence small financial companies had on the Russell, which clearly changes the analysis. It’s critical to look deeper than price – that’s a valuable lesson.

    It will be interesting to see what happens to the Russell once financials start to turn back to lower valuations.