RUT Russell 2000 Small Caps Daily Chart Price Bounces from Correction Level 150-Day MA Slope Flattening for Potential Cyclical Bear Market Potential Death Cross

The pink lines show the 1212 top and 1191 level which constitutes a -10% correction. As soon as price logged the correction phase for small caps, boom, the bulls rush in to buy and send price higher avoiding the -10% correction. The death cross (50-day MA under the 200-day MA) for the RUT is probably only about one week away. The blue chip divvy stocks continue to catch a bid, stocks such as AAPL, XOM, JNJ, BRK/A and others, while the smaller caps leak lower which is the expected behavior at market tops. The monitoring of the 150-day MA slope continues since a negative slope, should it occur, will indicate the exact conception of a cyclical bear market that would likely run for a year or three.

The last few readings for the 150-day MA are 1140.07, 1140.23, 1140.29 and 1140.35. Remember a week or so ago the differences each day were about 20 cents or so. Now the differences are 16 cents, 6 cents and 6 cents, respectively, pulling in tight. Visually, you easily see this with the 150-day MA green line above where it slopes up steeply with large differences between each print and then in recent days note how the slope is flattening and perhaps ready to roll over to the downside. If the slope turns negative (for today that would mean the 150-day MA ends the day at 1140.34 or lower), it identifies the start of a cyclical bear market for the stock market. Currently, the slope continues higher verifying the ongoing cyclical bull market. Of course if the bulls send price higher the 150-day MA will move higher and the bulls will remain in control with the bears left at the altar once again. If the 150-day MA slope turns negative and rolls over the bears will be stabbing the bulls finally bringing the beast to its knees after the five-year plus cyclical bull rally.

So watch the 150-day MA daily from here on out as well as the potential death cross. The blue circles show open gaps that will need filled. Note how the bears buttoned up price the whole way down not leaving any gaps behind and the gap they did leave they came up six days ago to button that up. Thus, price has no reason to ever move higher again from a gap-fill perspective. The 150-day MA also acts as a resistance ceiling for price over the last few days and as long as price is under the 150 the moving average number will continue to drop. Use all four moving averages above as key S/R levels to tell you if price is breaking out to the upside, or, collapsing to the downside. Bulls want 1133-1140 and higher. Bears want 1117-1120 and 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.

Note Added 7:23 AM on 6/6/14: The RUT launches higher to 1154. Picking up from the Tuesday print of the 150-day at 1140.35, the Wednesday print is 1140.43 and Thursday print is 1140.65. So a difference of 8 cents and 22 cents occur, respectively, allowing the bulls to remain firmly in the driver's seat. The 150-day MA was flattening but now the difference between each day's numbers are increasing showing this critical moving average moving higher again crushing any bear hopes for a cyclical bear market to develop, however, it is only a couple days, and considering the important jobs report is only an hour away, markets may need well into next week to chew on things and decide direction.