Market Direction and Stock Trends

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Russell 2000 Index (RUT) - Pressing Lower »» Daily Summary Analysis
By: Marty Armstrong | August 1, 2020

The Russel 2000 Index Cash closing today at 148043 is immediately trading down about 11% for the year from last year's settlement of 166847. This price action here in August is reflecting that this is within the scope of a bearish reactionary move on the monthly level thus far.


Up to now, we still have only a 1 month reaction decline from the high established during June. We must exceed the 3 month mark in order to imply a trend is developing.

The Russel 2000 Index Cash opened within last year's trading range which was 168168 to 132518. Right now, the market is still trading within last year's range with the last print at 148043. The last time such a similar pattern took place was 2018. Nonetheless, the market is trading below the opening print for the year which was at 167590. As long as this market remains trading above 134065 yet below the opening print on a closing basis, then a similar year-end closing in this posture will warn that we could have a knee-jerk low in place this year.

DAILY TIMING ARRAY PERSPECTIVE

On the Daily Level, regarding the timing, there was a reasonable potential of a decline moving into today was Fri. 31st with the opposite trend thereafter into Tue. 4th. We have a Daily Directional Change target due the day of Tue. 4th. This lines up with a turning point so in this case we can see at least an intraday event, or a turning point based on the close. Our volatility models also target this date as well. 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 150186 and 153762 respectfully but it is trading beneath both implying this has encountered initial resistance.

The Russel 2000 Index Cash closing today at 148043 is immediately trading down about 11% for the year from last year's settlement of 166847. This price action here in August is reflecting that this is within the scope of a bearish reactionary move on the monthly level thus far.

Up to now, we still have only a 1 month reaction decline from the high established during June. We must exceed the 3 month mark in order to imply a trend is developing. Today was the closing for this month of July. We did not elect any Monthly Bullish or Bearish Reversals on this closing. The market remains above two Pivot Points offering some underling strength in support at close of this month. Energy has been rising for the past 3 months while we have a divergence with rising energy and declining in price warning this trend may not be what it seems.

The Russel 2000 Index Cash opened within last year's trading range which was 168168 to 132518. Right now, the market is still trading within last year's range with the last print at 148043. The last time such a similar pattern took place was 2018. Nonetheless, the market is trading below the opening print for the year which was at 167590. As long as this market remains trading above 134065 yet below the opening print on a closing basis, then a similar year-end closing in this posture will warn that we could have a knee-jerk low in place this year.

PIVOT POINTS

Looking at our Pivot Points, the market is trading above one indicating pivot implying that this market is in a positive position with support at 146686 and resistance at 148174 and 150368 for this next trading session.

DAILY PIVOT POINTS
148174
150368
146686

Projected technical Support tomorrow lies at 147013. Naturally, opening below this area will cause it to become resistance. Projected technical Resistance stands tomorrow at, 148533, 150005, and 150766. Opening above this area will cause it to become support.

NEAR-TERM OVERVIEW

The Russel 2000 Index Cash made a new low penetrating the previous session's low intraday but we closed back above that low yet still closed lower at the end of the trading session. Notwithstanding, the market has dropped sharply again by 2.77%. Up to now, the market has declined for the past 6 days amounting to a near-term correction. We did close below the previous session's Intraday Projected Breakout Resistance indicator which was 150498 settling at 149510 gesturing that the market is not in a breakout mode at that precise moment. The current Projected Breakout Resistance for this session was 150174 which we still closed below. The Projected Breakout Resistance indicator for the next session will be 149709. Now this immediate indicator in the current trading session, is above the current close offering projected resistance. Therefore, we either must open above it and hold or close above it to imply the rally is still in play. Otherwise, failure to exceed 149709 during the next session warns the upward momentum may be lost and a retest of support becomes possible.

Intraday Projected Breakout Resistance
Today...... 150174
Previous... 150498
Tomorrow... 149709

We did close above the previous session's Intraday Crash Mode technical support indicator which was 146241 settling at 149510. The current crash mode support for this session was 146875 which we penetrated intraday but we closed back above that level finishing at 148043 implying the market is still rather vulnerable yet sustaining for now. The Intraday Crash indicator for the next session will be 144935. Now we have been holding above this indicator in the current trading session, and it resides lower for the next session. If the market opens above this number and holds above it intraday, then we are consolidating. Prevailing above this session's low will be important to indicate the market is in fact holding.

Intraday Projected Crash Mode Points
Today...... 146875
Previous... 146241
Tomorrow... 144935

As of now, the market remains neutral on the short-term levels of both momentum and trend on our indicators while the long-term trend and cyclical strength are bullish. The Superposition Reversal for tomorrow will be 142271 and a closing above that even after the election of Daily Bearish Reversals today, will imply a turn back to test overhead resistance will be possible.


HYPOTHETICAL MODEL ANALYSIS

Hypothetical Models, we see that we have Daily Bullish Reversals that would be generated if we see another new low penetrating 145762. These hypothetical Tentative Bullish Reversals would stand at 142271, 145146, 148534, and 149356, whereas a close above the previous high 149515 would tend to suggest that these Tentative Bullish Reversals will then become fixed as long as the low holds thereafter for at least several days. Moreover, the election of any of these Tentative Bullish Reversals during that session would signal a bounce is unfolding and that such a low may stand. However, if we continue to make new lows, then these WHAT-IF Reversals will be replaced by a new set until the low becomes fixed.

Hypothetical Models, we see that we have Weekly Bullish Reversals that would be generated if we see another new low penetrating 145761. These hypothetical Tentative Bullish Reversals would stand at 125188, 146128, 153762, and 167665, whereas a close above the previous high 150186 would tend to suggest that these Tentative Bullish Reversals will then become fixed as long as the low holds thereafter for at least several days. Moreover, the election of any of these Tentative Bullish Reversals during that session would signal a bounce is unfolding and that such a low may stand. However, if we continue to make new lows, then these WHAT-IF Reversals will be replaced by a new set until the low becomes fixed.

Hypothetical Models, we see that we have Monthly Bearish Reversals that would be generated if we see another new high penetrating 150724. These hypothetical Tentative Bearish Reversals would rest at-163105,-149436,-146221, and 96621, whereas a close below the previous low 138410 would tend to suggest that these Tentative Reversals will then become fixed as long as the high holds thereafter for at least several days. Moreover, the election of any of these Tentative Bearish Reversals during this next session would signal a decline is unfolding and that such a high may stand. However, if we continue to make new highs, then these Tentative Reversals will be replaced by a new set until the high becomes fixed.

REVERSAL SYSTEM

Relying on our Reversal System, our next Daily Bullish Reversal to watch stands at 149357 while the Daily Bearish Reversal lies at 146470. This provides a very near-term 9.91% trading range. Using the Weekly level, the next Bullish Reversal to watch stands at 152557 while the Weekly Bearish Reversal lies at 137430. This provides a 9.91% trading range. Now moving to the broader Monthly level, the current Bullish Reversal stands at 158618 while the Bearish Reversal lies at 110257. This, naturally, gives us the main broad trading range of a 30%.

REVERSAL MAP SYSTEM
-- DAILY -- | -- WEEKLY -- | - MONTHLY - |

174300 | 3 | 174300 | 1 | 174300 | 1 |
173346 | 2 | ....... | 0 | ....... | 0 |
172439 | 1 | ....... | 0 | ....... | 0 |
172382 | 1 | ....... | 0 | ....... | 0 |
172263 | 2 | ....... | 0 | ....... | 0 |
172230 | 1 | ....... | 0 | ....... | 0 |
172022 | 1 | ....... | 0 | ....... | 0 |
171590 | 1 | 171590 | 1 | ....... | 0 |
170618 | 1 | 170857 | 1 | ....... | 0 |
169518 | 1 | 169546 | 1 | ....... | 0 |
168918 | 1 | ....... | 0 | ....... | 0 |
168739 | 1 | ....... | 0 | ....... | 0 |
167666 | 1 | 167666 | 1 | ....... | 0 |
166120 | 1 | ....... | 0 | ....... | 0 |
163312 | 1 | 163478 | 1 | 163478 | 1 |
153975 | 1 | ....... | 0 | 158618 | 1 |
153763 | 1 | ....... | 0 | ....... | 0 |
153340 | 1 | ....... | 0 | ....... | 0 |
150695 | 1 | 152557 | 1 | ....... | 0 |
149674 | 1 | ....... | 0 | ....... | 0 |
149357 | 1 | ....... | 0 | ....... | 0 |
----------------------------------------
146470 | 1 | ....... | 0 | ....... | 0 |
143645 | 1 | ....... | 0 | ....... | 0 |
142854 | 1 | ....... | 0 | ....... | 0 |
142364 | 1 | ....... | 0 | ....... | 0 |
140305 | 1 | ....... | 0 | ....... | 0 |
140097 | 1 | ....... | 0 | ....... | 0 |
138400 | 1 | ....... | 0 | ....... | 0 |
137430 | 1 | 137430 | 1 | ....... | 0 |
137270 | 1 | ....... | 0 | ....... | 0 |
134938 | 2 | 136115 | 1 | ....... | 0 |
133398 | 1 | ....... | 0 | ....... | 0 |
130726 | 1 | ....... | 0 | ....... | 0 |
126255 | 2 | ....... | 0 | ....... | 0 |
122554 | 2 | ....... | 0 | ....... | 0 |
121061 | 1 | ....... | 0 | ....... | 0 |
120365 | 1 | ....... | 0 | ....... | 0 |
119184 | 1 | ....... | 0 | ....... | 0 |

WIDE-RANGING CLOSING TREND CHANGE POINTS

Change in Trend Indicator
Daily ........ 147203
Weekly ....... 141310
Monthly ...... 118669
Quarterly .... 129292
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.

Factually, 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 252 and a month end closing above this level will be a buy signal for now.

END OF MONTH

Today is the last trading day of the month.

We have reached the closing for July 2020.

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 2013 which signaled the rally would continue into 2018.

On a broader position, this market remains in a positive posture on the yearly level while the quarterly level remains neutral on our indicating models. Still, it remains below key resistance on the quarterly level. This implies that the high established back in 2018 still remains important resistance. Immediately, it remains in a positive position on the weekly level but negative on the monthly level at this moment.

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

RISK FACTORS
Russel 2000 Index Cash Risk Table

----------------- UPSIDE RISK ----- DOWNSIDE RISK ---

DAILY......... 149357 | 0.887% | 146470 | 1.062% |
WEEKLY........ 152557 | 3.049% | 137430 | 7.168% |
MONTHLY....... 158618 | 7.143% | 110257 | 25.52% |
QUARTERLY..... 160220 | 8.225% | 113170 | 23.55% |
YEARLY........ 0 | 90.11% | 104046 | -1.8% |

DAILY TECHNICAL OVERVIEW

After the historical high was established during 2018, a major low was created on 03/18/2020 at 96622 which was 97 days from that major high. The Uptrend line resides at 97275 providing the technical underlying support. The top of the Uptrend Channel stands at 109437 which we have exceeded at this point in time.

Meanwhile, the Downtrend Line from that major high of 2018 to the subsequent reaction high of 172600 formed 10 days thereafter resides at 93599. This line has provided technical support which the market has been trading above. Given the fact that the market is trading well above that technical indicator implies that any potential support would be during a short-term panic sell off. The post high low was established at 96622. We have not elected any Bullish Reversals from that important post high low on the daily level.

The more recent Downtrend Line constructed from the last high of 150724 to the subsequent reaction high of 150186 stands at 149783 while drawing a channel provides us with support at 144400. A break of this support with a closing below it will suggest a correction is unfolding. However, an intraday penetration of this support with a close back above would suggest that market could pause briefly.

Turning to our Energy Models, the market is making new intraday lows in price while our Energy Models are still making higher highs. This implies that any correction may hold important underlying support rather than a change in the broader trend on this level.

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

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