We’ve been watching the 160 area on the Russell 2000 for several weeks now. The idea is that the Russell 2000 is all about small cap growth stocks and so a shift in investor psychology over to risk-on trading in small caps would be a bullish indicator for the entire market.
We broke above the important 160 level on IWM and now we want to see a retest of that level where it becomes support (yellow line above).
The 160 level is really just a number we chose to make memorization easier. The support zone extends from $157.50 up to $161. Here is a 9-month chart so that you can better see this zone.
What’s really important is the support test. Breakouts are often headfakes perpetrated on unsuspecting retail traders. It’s the re-test of the $158 area that will be revealing.