Thursday, September 3, 2015

RUT Russell 2000 Small Cap Index Daily Chart Death Cross

The Russell  2000 small caps join the S&P 500 and Dow Industrials with a Death Cross chart pattern where the 50-day MA stabs down through the 200-day MA. Moving averages are simply a smoothing mechanism which averages the stock price over the specified number of days. As mentioned by Keystone many times, seasoned technicians do not pay a lot of attention to the death cross but it is important and does guarantee weakness ahead--as long as the death cross remains.

Typically, when the death cross occurs, price will actually bounce since it has already been beaten down for many weeks to create the death cross in the first place. The RUT has been trying to stage a recovery rally in recent days. After the relief rally period which may last a few days or weeks, the stock or index will be lower 100% of the time, by definition, as long as the death cross remains.

The Nasdaq is the only major index that has not yet created the death cross. The SPX, Dow and RUT are now in the bearish camp. The four major indexes that Keystone tracks  are the SPX (S&P 500 the broad market), INDU (Dow Industrials blue chip large-cap dividend stocks), COMPQ (Nasdaq Composite tech and biotech stocks) and the RUT (Russell 2000 small cap speculative stocks).

It is comical to listen to pundits commenting on the death cross chart pattern. In troubling market times, everyone turns into a market technician. As is the case in life, those equipped with minimal knowledge become instant experts and espouse confusing and incorrect information. One pundit said the death cross forecasts a market crash.  Keystone has to pause a few seconds because this is hilarious every time he hears it; a death cross chart pattern does not forecast a market crash. Small caps are bleak going forward and the bulls can only save the day with a golden cross in the weeks ahead with the 50-day MA recovering back above the 200-day MA. If the death cross remains, stocks are going far lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.