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.

IWM stock in the daily time frame.

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.

finviz dynamic chart for  IWM

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.

Russell 2000 News From Google