The Russel 2000 small caps (IWM) have show extreme volatility in recent days making a 10% round trip in less than a month. After briefly breaking the neckline ($66) of that massive head & shoulders top (H&S), IWM rallied back up to the neckline of the smaller H&S at the peak of the "massive" one. The confluence of topping oil and a bounce in the finance sector gave the rally some speed but the declining 50 and 200 dmas stopped it dead. The price action, CCI and stochastics look similar to what happened after the march lows when the rally started steep (like recently) then slowly climbed for a few months, will things be the same this time? One reason to believe not is relative position of the 50 and 200 dma's right now, declining, parallel, $1 apart and straddling resistance at $72. In other words, there is a wall of resistance right now just above. Back in march the 50 dma was $8 below the 200 dma and turning upwards so short term had gotten way ahead of the long term (unlike right now). And on the fundamentals, (if I was going to play analyst) i'd say things are not as bullish as they might seem. Oil is declining because of a global economic slowdown causing demand to wane, that hardly seems bullish to me. On the financials, they rallied off intensely oversold conditions following the second largest bank failure in US history. Furthermore, two more banks were seized by the FDIC this weekend and Washington Mutual is on fire. I think the odds of a major bear attack are very high right now. Maybe oil will bounce and send the bears into a rage. At any rate, the only support I see below is minor at $69 until you get to the neckline of the major H&S topping pattern. If $66 clearly breaks I would expect a crash scenario, but we aren't there yet.
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