Market Direction and Stock Trends

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Russell 2000 Index (RUT) - New Pattern Forming »» Daily Summary Analysis
By: Marty Armstrong | June 27, 2020

The Russel 2000 Index Cash closing today at 137878 is immediately trading down about 17% for the year from last year's settlement of 166847. There was a likelihood of a rally moving into the next target of Fri. 26th, which is reinforced by also a Directional Change Target with the opposite trend thereafter into Mon. 29th. We have overall 4 Daily Directional Change targets ahead and 2 that also align with a main turning points on the top line of the Array. These targets in time are Fri. 26th Tue. 30th. Directional Change targets that align with the top line for turning points often unfold as the main cyclical events. Don't forget, a Directional Change can also be a sharp dramatic move in the same direction, not just a change in direction. Currently, the market is trading below both the previous weekly and monthly highs which were 145412 and 145037 respectfully but it is trading beneath both implying this has encountered initial resistance.


Our Forecast Array suggests that there is a practical likelihood of a rally moving into the week of June 29th with the opposite trend thereafter into the week of July 6th. However, a break of this current week's trading range of 145412 - 137440 would warn of a possible cycle inversion given we have a target this week. We have Weekly Directional Change targets due the week of June 22nd and the week of August 24th. Don't forget, a Directional Change can also be a sharp dramatic move in the same direction, not just a change in direction.

The technical daily support for the next session lies at 134942 intraday but the market remains above that level right now settling at 166847. On the weekly level, we also show underlying technical support at 132402. On the monthly level, key broader underlying technical support at 100849.

TARGET Technical Support

134942 | 132402 | 100849


Reflecting on the Reversal System, the last Reversal on the Yearly level to be elected was Bullish. The Quarterly level also shows the last Reversal to be elected was Bullish. On the Monthly level, the last Reversal to be elected was Bearish showing that the mid-term level is still negative. The Weekly level shows that the last Reversal to be elected was Bullish showing that the mid-term level is still positive. So far, this market has been an outside reversal trading year exceeding the previous year's high and breaking under last year's low. Since it is also trading below last year's settlement, this market still remains in a weak bearish position on a broader perspective.

Always remember that the true definition of a bull or bear market is defined by its international value expressed in the major currencies. A market which is rising in proportion to the decline in the local currency is merely a market readjusting to the decline in the value of the currency. Do not be fooled by this type of trend for it is merely currency inflation given everything has a true international value which will be arbitraged.

PIVOT POINTS

Looking at our Pivot Points, the market is trading BELOW all three indicating numbers and that leaves this in a bearish position currently with resistance at 139800, 140176, and 141973 for this next trading session. Projected technical Resistance stands tomorrow at, 138751, 138964, 142223, 142329. Opening above this area will cause it to become support.

OVERVIEW ANALYSIS

Change in Trend Indicator
Daily ........ -139541
Weekly ....... 136283
Monthly ...... 114994
Quarterly .... -145768
Yearly ....... 118169

Note: Negative means the market is trading below that level on a closing basis. The broader change in trend takes place only on the monthly to yearly levels. Those looking for exit strategies may look at these numbers on a closing basis per level.

Currently, we have exceeded last month's high so we have therefore generated a new What If Monthly Bearish Reversal which lies above the present trading level at the general area of 144821 warning that this rally has still not punched through important overhead resistance. A month end closing beneath this level will keep this market in a bearish tone.

Immediately, we have broken below last week's low and that means we have generated a new What-If Weekly Bullish Reversal which lies above the present trading level at the general area of 856 warning that this decline has still not punched through important overhead resistance. A weekly closing beneath this level will keep this market in a bearish tone. At present, we have broken below last month's low and that means we have generated a new What-If Monthly Bullish Reversal which lies below the present trading level at the general area of 5134 and a month end closing above this level will be a buy signal for now.

RECREATING TIME

Note: Time is relative so this model creates time so we have a Yearly Bullish/Bearish Reversal Each Day. This allows us to see if the broader trend is shifting instead of having to wait for year-end.

Based upon our Dynamic Yearly Models where time is relative, assuming today Fri. 26th would be constructively the end of the year, we are currently trading above all Dynamic Yearly Bullish Reversals for today's theoretical year-end closing. This is on all four dimensions implying we are still in a broader bullish trend for now. Keep in mind, that these are dynamic reversals good EXCLUSIVELY for today only.

We closed the previous month at 131066as was the case last month. The next Monthly Minor Bearish Reversal resides at 110257 whereas the next Monthly Major Bearish Reversal is to be found at 98120.

END OF QUARTER

We are nearing the closing of this quarter with just 4 days to go. The market is trading quite strong above our first projected target which rests at 128303. The projected overhead technical resistance stands at 188480. The projected technical support resides at 74884. The next Quarterly Minor Bullish Reversal stands at 166189 with the next Quarterly Major Bullish Reversal standing at 160220. The next Quarterly Minor Bearish Reversal resides at 108252 whereas the next Quarterly Major Bearish Reversal is to be found at 113170. Immediately, the market is somewhat bearish on our indicating range models. However, the monthly level remains moderately bearish for now yet the weekly level is also moderately bearish. We also have a Minor Monthly Bearish which is closer to the market right now. This resides at 110257 and therefore, even a month-end closing below this would signal a further retest of support is likely.

Therefore, when we put this all together, the various timing levels require our focus on the following Bearish Reversals for the close of this quarter. The numbers to watch are: 113170 and 110257.

BROADER OVERVIEW

The historical perspective in the Russel 2000 Index Cash included a rally from 2002 moving into a major high for 2018, the market has been consolidating since the major high with the last significant reaction low established back in 2002. The market has penetrated last year's low. The last Yearly Reversal to be elected was a Bullish at the close of 2018.

This market is still holding positive on our yearly indicating models with overhead system resistance and underlying system support, it remains in a negative poisition on all other levels from the quarterly down to weekly. In fact, the quarter models are in a negative position with still some underlying system support and system resistance above current levels. The market is also trading between underlying support and overhead resistance on both the monthly and weekly levels as well.

This past year alone, saw a significant price drop of about 23%.

DAILY TECHNICAL OVERVIEW


The perspective from our Energy Models, the market is making new intraday highs in price and our Energy Models are flipping from negative to positive. The low on our Energy Model took place 06/25/2020. Therefore, this immediate rally may prove to be short-term unless this model begins to create new highs.

OVERALL TREND

The Russel 2000 Index Cash is in bearish position on the quarterly short-term level of our model while the broader term is neutral to bullish implying that the long-term bull market is still holding. The Russel 2000 Index Cash is in bearish position on the monthly short-term level of our model while the broader term is also neutral to bearish. The Russel 2000 Index Cash is in bearish position on the daily short-term level of our model while the broader term is also neutral to bearish. Overall, the posture is generally bearish for now.

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