Market Direction and Stock Trends

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Russell 2000 Index (RUT) Monthly Summary Analysis »» New Temp High
By: Marty Armstrong | May 18, 2019

ANALYSIS AS OF THE CLOSE Fri. May 17, 2019: Russel 2000 Index Cash closed today at 153576 and is trading up about 13% for the year from last year's closing of 134856. Currently, this market has been rising for this market has been rising for 4 months going into May suggesting that this has been a bull market trend on the monthly time level. while it is still trading below last month's low of 154289.


At the moment, the market remains neutral on the momentum indicator yet bearish on the short-term trend indicator while the long-term trend and cyclical strength are bearish.

The historical major high took place here in 2018 and we have up to now this year remained trading within last year's range in a consolidating pattern. So far we have seen a trading range of 161837 for a high and 132518 for the low. This market on the yearly level has been making new highs since the last low established 6 years ago which has been a series of successive advances. The last 2 highs have been progressively making higher highs implying we have had a bullish market in motion for the past 11 years. The last high was made during 2018. We did elect two Bullish Reversals which confirms this has been an impressive reaction for now on this level.

Meanwhile, our technical resistance stands at 189759 and it will require a closing above this level to signal a breakout of the upside is unfolding. Nevertheless, our technical support lies at 181825 which the market is now trading beneath illustrating technical weakness. Last year we did see an outside reversal to the downside, which is a warning that we have at least a pause in trend at this moment. If we penetrate that low of 126692 and close below it this session, then we can see further downside ahead in price movement. Otherwise, holding that low intraday allows for a pause and consolidation briefly.

A possible change in trend appears due come June in Russel 2000 Index Cash so be focused. The last cyclical event was a low established back during December 2018. Normally, this implies that the next turning point should be a reaction high. However, the market has made a rebound to the upside so we could see a potential reaction high at that time frame. Last month produced a high at 160308 but closed on the positive side and so far, we have exceeded last month's high. We now need to close above 160308 on a monthly basis to imply a further advance to the upside immediately for now.

Some caution is necessary since the last high 174209 was important given we did obtain two sell signals from that event established during August 2018. Critical support still underlies this market at 134523 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak trading beneath last month's low. Looking at a broader time horizon, this market is in an uptrend position on all our monthly indicators for the near-term trend. We see here the trend has been moving up for the past 4 months. The previous low of 126692 made during December 2018 on the Monthly level has held and only a break of 149499 on a closing basis would warn of a technical near-term change in trend. The previous high made during August 2018 on the Monthly level at 174209 remains significant technically and only exceeding that level on a closing basis would suggest a reversal in the immediate trend. We have generated a buy signal so some caution is required.

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