Let's Get Ready to Rumble This Afternoon

The close today on the Russell 2000 Index is going to be a critical one, perhaps are significant a daily close the Russell has had to contend with in quite some time. For a while now, that 1,150 area on the Russell has been providing support, converging with several key daily chart major moving averages. However, the small caps in the Russell have recently failed to break above 1,190 resistance, all the while diverging from the senior indices (Dow, S&P, Nasdaq) in failing to surpass their own July highs. To my eye, a close under 1,150 on a daily basis would be a major development in the bear camp, insofar as the recent wild price swings or "violent indecision" resolving lower to commence a more old-fashioned correction, if not something more ominous. Russell bulls have been a cocky and resilient bunch for a while now. But the fact remains that this index, with plenty of growth managers providing institutional support to it, has gone exactly nowhere for a full year now. Below, I show a Russell daily chart projecting a diamond topping pattern (light blue lines) down to 1,110, provided we see at least a daily (and preferably a weekly) close below 1,150.