Karpel’s Corner: Short term break in $RUT, but Long term support intact.

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

Well, the $RUT broke short term support — 1170 in two days.

The 3.4 percent break in this high beta index is impressive in that it only took two days. But this is still orderly at this stage since long-term support is well intact in the $RUT at 1100.

Seasonality could be a factor at this juncture. Typically, the months of July and August are the weakest of the year. And, with a one-sided extended market, this could be a normal respite — especially if you are a trapped bear.

We watch large cap index S&P 500 ($SPX) levels that would make us think that a true trend change is in the works, 1919 and then 1878. Breaks at these levels are no guarantee of trend change but these are levels that will bring volatility and growing tension. Trade high Probability set-ups at this stage, and reduce risk capital in this uncertain market environment.

See you next time at the Corner!