Harry's Take November 20, 2024

Russell 2000 Backed Off New High: Critical Make or Break

The Russell 2000 small caps failing to make a new high has been one of three divergences in the rally following the November 2021 stock top and the mini crash into late 2022. The other 2 have been the IBB Biotech Index and Ethereum in the crypto sector. On November 11, the Russell rallied to near its November all-time high of 2,459, hitting 2,442 intraday before falling back to as low as 2,298 on the 15th. Hence, it failed to break out of that divergence, and still stands.

If the Russell 2000 can rally again and break above 2,459, it would break that divergence and suggest that new highs will continue to come in the stock market. If it does not break the divergence, then it will become a double top and continue to be even more bearish for stocks.

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If IBB Biotech can break above 149.90 it would also argue further for continued new highs. And Ethereum would have to break back above its high of $3,375 likewise, to argue for new highs in the broader crypto sector to continue.

If these three divergences continue downward, then this major top will continue to look complete across markets.

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Harry

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