Quick Charting the Russell and NASDAQ at New Highs

Apr 28, 2011: 4:46 PM CST

If you’re focusing all of your attention on either the S&P 500 or the Dow Jones Index, there’s a major headline you might be missing:

The Russell 2000 Broke to New Lifetime Highs while the NASDAQ Index Broke to New Recovery Highs.

The Russell 2000 is comprised mostly of Small-Cap Companies while the NASDAQ is mostly comprised of technology-related companies.

Here – let’s start with the Monthly simple view of the Russell 2000:

For reference, the all-time high for the Russell 2000 index occurred in June 2007 at 856 – today’s high takes us to new record territory at 861.

What strikes me about the Russell 2000 index is that the 2003 to 2007 recovery took the index much higher above the 2000 peak near 600.

Also, the big peak for the Russell occurred in June – not October as was the case for the rest of the major US equity indexes.

As long as we stay above the 850 level, the Russell remains in primary uptrend/bullish mode with no remaining overhead levels of resistance to monitor.

The situation is almost identical in the NASDAQ index… unless you count the once-in-a-lifetime run-up to the 5,000 level during the peak of the Technology Bubble.

Structurally (looking at price only), the Russell and NASDAQ chart are very similar, except that the NASDAQ peaked along with the Dow Jones and S&P 500 in October 2007 at 2,861.

Today’s new high at 2,872 eclipses that high and places the NASDAQ in the same position as the Russell… except for the fact that the NASDAQ peaked above 5,000 in March 2000 ahead of the devastating crash that took the index back to 1,100.

Like the Russell 2000, the NASDAQ at new recovery highs breaks a “line in the sand” to the bullish camp, forcing some bears/short-sellers to buy-back positions to cover (a potential short-squeeze).

I know there are a lot of bearish commentaries out there, but price tells a different story, and it continues to do so as long as the indexes remain at new recovery (or lifetime) highs.

Unless we fall back under 850 in the Russell or 2,800 in the NASDAQ soon, then the market continues to be dominated by the primary uptrend and the buyers/bulls.

As such, these will be the new key lines in the sand to watch in these strong markets (the S&P 500 and Dow Jones have yet to catch-up with these indexes).

Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “Quick Charting the Russell and NASDAQ at New Highs”

  1. Svet Says:

    If you squint, you can imagine an inverse head and shoulders formation projecting the Russell at 1,075 as a target