Small caps at 2008 weekly highs, but daily charts show bearish reversal

We have good news, and we have bad news. The good news is that the bulls are winning all the major skirmishes in small-cap stocks, and the market pushed up to the highest weekly close of the year last week. Mixed into a time frame that sees the Dow and S&P 500 still down some 12% on the year, small-caps at a yearly high close might surprise some stock market watchers.

Elsewhere on the good news front, the Russell 2000 (NYSE:IWM) confirmed our congestion zone breakout from the previous week and filled the upside target on that breakout, which was at 758. With the market now at the highest weekly close of the year, shorts will be on a very tight equity leash, which is another supportive element in play.

As for the “bad” news, there is a bearish reversal on daily charts from Friday’s pullback, and there is some risk of a double top on weekly studies in conjunction with the June and July peaks...

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