RE: Market Breadth Extra
John Murphy over at stockchart.com says there is a potential head and shoulders pattern on the Russel signaling a bearish top.
"SMALL CAP HEAD AND SHOULDERS TOP?... A debate is going on within the technical community as to whether or not the Russell 2000 Small Cap Index is in danger of completing a "head and shoulders top". A case can certainly made for it, although it would be an unusual one. The daily bars in Chart 1 show two smaller peaks (shoulders) formed during January and late August. In between those two lower "shoulders" a "double top" was formed between March and early July. So while it might not quality as a textbook "H&S" top, the bearish warning is still valid. At the moment, the Russell 2000 iShares (IWM) are testing a "neckline" drawn under its February/May lows (red line). A downside violation would complete the topping pattern that's been forming for months. The negative volume pattern confirms that bearish analysis."
What do you think?