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Russell 2000 Gives a Buy Signal

Aug 01 2008

Russell 2000 Gives a Buy Signal

Of the four main indexes, the Nasdaq Composite, the Dow Jones Industrial, the Standard & Poors 500 and the Russell 2000, the Russell 2000 was the last to give a sell signal in mid-June and is now the first to give a buy signal.

Not a Bear and Not a Bull

            Unlike an investment news publication printed this past week and a popular investment guru claimed on his television show this week, there is not a day when the bull market changes to a bear or a bear market changes to bull. But there’s a period of consolidation and then pockets of the market begin to break to the upside or to the downside. Small and Mid Sized Caps represented by the Russell 2000 have now broken to the upside signaling the beginning of an uptrend in this one class.

Pare your Shorts

            It is likely that the other indexes will follow suit and begin an uptrend but it’s too early to jump in on the long side. Rather, begin to pare your short positions and move your portfolio to a neutral weighting.

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