The Russell 2000 index is currently trading at a new all-time high at 2127. While the underlying trend is extremely bullish, a few technical indicators are suggesting that this market is becoming increasingly susceptible to a strong bout of profit taking.
The 14 week relative strength index is well into overbought territory at 77 percent. The current price is 25 percent above its 40 week moving average, a level which has not been seen over the past ten years.
The Fibonacci 61.8% upside projection level, measured over the 966.21 -1699.64 range, comes in at 2152 which is only 25 points away from the current price. Attention should now be focused on the relation of the current price to the upper Bollinger band. Should the distance between these two levels increase, this would confirm that a short-term trend reversal stands before us.