Saturday, April 23, 2016

RUT Russell 2000 Small Caps Weekly Chart

There is major price resistance at 1160-1166 (thick blue line). The market bulls will be on easy street above this level. The 100-week MA is 1166. Price will have to get up through the 50-week MA resistance at 1151 first.

100-wk MA 1166
Price Resistance Level 1160-1166
50-wk MA 1151
Now 1147
150-wk MA 1145
200-day MA 1129
150-day MA 1106

Remember last year when Keystone pointed out the red rising wedge, overbot conditions and neggie d that created the big spank down. The brown bear flag pattern plays out next with leg one dropping about 215 handles, then the sideways consolidation with a slight upward bias, this is textbook behavior, so when price falls and drops under 1125, under the brown consolidation box, the lower target is in play at 1000 which is 1210-ish minus 215. Price nails the 1000 satisfying the bear flag.

The light blue lines show an expansion pattern in play, or megaphone pattern. This started one year ago and price keeps making lower lows and lower highs in and expansion pattern. If the bears can hold the top trend line in this 1125-1166 area over the next month, and price rolls back over to the downside, there is a mightily low target in play at that point. If price targets the lower trend line say into the end of this year, that would be the 700-900 range. There are likely very few investors ready for that. Of course the chart and analysis can be updated and modified as the time progresses. If price moves above 1166, there is likely a bull party that will continue well into and perhaps through the summer with elevated stocks prices.

The Russell 2000 is a major key to the stock market path ahead and it will be providing serious and important clues this week. The ROC indicator topped out and the stochastics are overbot so these two indications will combine with the neggie d on the daily chart to create a pull back. The green lines, however, show long and strong indicators so price will want to come back up after any pull back and make a higher higher sometime in May. 

If there is a two-week jog move, say down this coming week and up the week after, the indicators can conceivably negatively diverge as fast as two weeks but right now it hints that the top for the RUT may be around mid-May. The global news will likely begin playing a more important role in the stock market. The Brexit vote is 6/23/16. Stocks are long overdue for a pull back so a move lower combined with bad geopolitical news can create a sharp drop. The central bankers keep pumping with easy money and the Federal Reserve is on tap this week on Wednesday. The stock market typically moves sideways to sideways higher into the Fed announcement. 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.