Wednesday, November 3, 2010

Russell 2000

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Have been quite busy over the last couple of days. As I mentioned on Sunday we had positive opening on Monday and then we had quiet trading until today's FED's announcement. The news about another stimulus with size of 900 Billions have pushed the US dollar down and the indexes (stock market) reacted by the move up respectfully.

As a rule, the FOMC meetings are supported by increase in volatility and volume. Today's trading session was not an exception from this rule. As a result we have strong daily bullish volume. At the current moment the indexes are at their top levels - some indexes are a few points below and some are a few points above.

From the money flow prospective the the Nasdaq 100 indexes show positive flow on 1-,5-,15- and 30-minute charts. On the hourly chart the Nasdaq 100 money flow could be considered negative. Similar analysis could be seen on the S&P 500 and DJI indexes. The Russell 200 index has been traded on higher than other indexes average volume over the last couple of trading sessions and have slightly different money flow. With Russell 2000 index we may see some weakness in money flow on 5-minutes and 30-minutes charts.

Overall, there are some signals that we may see positive trading tomorrow. Yet, again, taking in the account overbought signals on the longer-term charts I would not rely on these signals. I would rather stayed in cash until clearer longer-term trend.

For tomorrow's intraday outlook, I would focus on the Russell 2000 5-min charts. Since it has been trading on the higher volume lately, it has clearer signals - the Russell 2000 5-min chart already shows decline in money flow towards bears.

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