The broadly based Russell 2000 Index of the smallest US stocks, a benchmark for many mutual funds, has struggled towards the top of its trend channel for some time. It has been forming a broadening top since early last year and is now testing the bottom of the channel (since 2009's low). Weekly and monthly closes below this line ought to add to momentum, which turned bearish in August (when moving averages saw a death cross), setting up pressure for a test of key Fibonacci retracement support at 1,030 points. A break below the 1,000-point level would seriously damage investor sentiment and suggests a slump to 860 - the highs in 2007 and 2011.
