I noted two weeks ago why the 1,000 area on the Russell 2000 (RUT) could be a big area of resistance. So far, that is exactly what has happened.
Now I want to take a look at the Russell 2000′s ETF, the IWM on a weekly chart. Again, I see some warnings that momentum could be staling.
First off, two weeks ago it formed a spinning top on a candlestick chart. I like to look at weekly charts because they tend to be more accurate when trying to pick an intermediate-term change in trend. Well, spinning tops are a sign of indecision in the trend. Not the end of the world, but something to be leery of when you consider that psychological level of 1,000 just overhead.
Then last week we saw a bearish engulfing pattern take place. This occurs when a red candle ‘engulf’s the previous periods body. In other words, it could suggest a change to a bearish trend.
Now this doesn’t mean I think we are due for type of crash here, but these are some signs of weakness that must be accounted for.