Price could, of course, trade anywhere within the grey shaded zone in a very large 300 point range if volatility were to increase dramatically during that time period (the bottom of this range just happens to be around 666)...something that could happen if a recession were to hit in 2013 to tie in with the enactment of the Fiscal Cliff policies on January 1st. The pressure may be on for fund managers to push price higher until the end of this year to, potentially, provide a cushion against such a scenario.
As usual, I'll be watching to see if volatility builds on the Russell 2000 Index, as represented by the Daily ratio chart below of the RUT:RVX. A break and hold below its lower channel and, subsequently, 37.00 would indicate that further weakness is to come in Small Caps. Price has, so far, failed to hold at its all-time high hit last Friday, but closed today above the lower channel, as well a series of downtrend lines and horizontal price support levels. Volatility is increasing, along with today's volumes, and the chances of a further pullback are growing...I'm watching to see if the Momentum indicator crosses the zero line and accelerates to the downside.
