Market Bottom

The markets continue to bleed as investors pull their capital out of Wall Street. The bounce from this sell-off is inevitable, but timing it is difficult. I always like to look at the Russell 2000 Small-Cap Index because it really seems to be an accurate indicator of true market strength. The $RUT is a very balanced cross-section of companies in the market. While the newspapers always talk about the $INDU, I think that the $INDU is a useless indicator because of how disproportionately it is weighted.

Anyway, here is the longterm weekly $RUT. The chart is showing 3 different supports that coincide at ~700 on the $RUT. First there is 38.2% the fibonacci retrace that is currently supported at 700. Then the uptrending trendling support that takes only closing prices into accounts. And finally the obvious support that is just shy of 700. 

If the markets bottom out as the Russell touches 700, then the markets are still in a healthy longterm uptrend. If there is no bounce at 700, then the market will continue to deteriorate.  

By the way, be suspicious of the sharp sell-off in the last hour of trading on Tuesday. It tells you that the smart money is not done selling off their stock to you yet. Remember, the "amateurs open the markets, but the pros close it."