The Russell 2000 has been effectively consolidating for the last 230 days, or 7½ months, 31% up from its former 2018 all time high. When a security consolidates at a high, the odds are that it will break out and reach higher highs.
Who actually sees any additional upside exceeding its March '21 ATH? The Fed's timeline is already set: It is scheduled to begin tapering asset purchases and raising benchmark interest rates beginning as early as mid '22, early '23.
Is the Russell going to trade within this range or break out to new highs until then? It's likely going to remain rangebound.
The charade of supporting markets at the expense of everything else will continue as long as possible. The probability the Fed delays these plans is quite high, since it’s predicated on maximum employment and stable prices (symetric 2% inflation), and we are a long way from maximum employment. (Inflation is another story.)
On a side note, the Russell has outperformed the S&P 500 over the past 18 months.
Submitted September 27, 2021 at 11:36PM by vutffj https://ift.tt/3m3WJzV
