RUT Russell 2000 Small Caps Monthly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Price Extended; Upper Band Violation; Small Caps in Process of Printing Long-Term Top

Now that August is in the rearview mirror and September has begun, the monthly charts can be assessed. The SPX (S&P 500), the major stock index most-closely followed by professional traders and considered synonymous with "the stock market" indicates that a long-term top is in place a la October 2007. The SOX (Semiconductors Index) has also placed a significant long-term top. Ditto the trannies (TRAN; Dow Jones Transports).

INDU, or DJI (Dow Jones Industrials), is set up similarly as the SPX and SOX but the Dow has not overtaken the price high from late January. Ditto the NYA (NYSE Composite).

The COMPQ, NDX and RUT indexes are nearing their long-term tops but are not yet fully negatively-diverged due to the long and strong MACD lines. With the Labor Day holiday behind us and the last four months of the year ahead, it is a good time to review these charts and surmise how the long-term top in the stock market may play out.

The RUT monthly chart above displays the higher high in price as compared to the January record highs. The all-time high is 1742.09 and all-time closing high 1740.75 both printing on 8/31/18 a week ago. Note that the chart indicators (RSI, histogram, stochastics and money flow) are negatively diverged, however, the MACD line remains long and strong wanting another higher high in price after a pull back occurs on a monthly basis.

The long-term red rising wedge is ominous. The overbot RSI and stochastics are also bearish indications. Price is also extended above its moving average ribbon requiring a mean reversion lower.

The Russell 2000 has violated its upper standard deviation band since 2016 so the middle band, also the 20-month MA, is on the table, at a  minimum, at 1521 and rising. This level is 192 handles under the current price; about -11% below.

The chart signals that the long-term top (months and years) is developing and very near for the small caps like the March 2000 and October 2007 tops. The May-June 2015 significant top, that Keystone called in early 2015, was also a long-term top, but the global central bankers colluded to stop the slide in early 2016 that created the Tweezer Bottom on the chart. Of course the central bankers will always implement policies that protect the wealthy privileged class that own large stock portfolios. The central bankers perform the wealthy's bidding since they are rewarded by the investment banks for their loyalty with lucrative speaking engagements once they leave public office. Wall Street is a corrupt, rigged game controlled by the wealthy class in America.

Watch the purple circle for the MACD line. This tells you when the long-term, multi-month and likely multi-year top, is in place, likely only one to three months away. As price prints new all-time highs watch for when the MACD flattens and rolls over to the downside. This neggie d will mark the top in the small cap stocks. The expectation is that the RUT will retreat due to the negative divergence with the RSI, histo, stoch's and ROC, say for a month, and then come back up for the matching or higher high. At that time, the MACD will likely roll over with negative divergence. The long-term stock market top is in place now for the S&P 500, SOX and trannies, due to the universal negative divergence with the chart indicators and the RUT should follow their lead over the next one to three months. The purple circle tells you when the top is in for the small caps.

The ADX will need to roll over lower to verify THE top. Note that despite the far higher highs in price over the last few years, the ADX is not above the 2015 highs.

Also watch the Aroon since the green line will fall to verify that THE top is in for the stock market a la 2015. These prices on stocks may not be seen again for many months even many years. If you are a young person contemplating placing money in the stock market; don't. Let that money sit on the sidelines, do not worry that it will not receive much of a return, if any. Do not be discouraged if you see the small caps remaining buoyant for a couple more months. In a year or two, you will look back and realize it was a smart decision and at that time, depending on how things play out, you may have an excellent chance to enter the stock market at far lower prices. 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.