Market Direction and Stock Trends

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Russell 2000 Index (RUT) »» Weekly Summary Analysis
By: Marty Armstrong | May 21, 2022

The Russel 2000 Index Cash closing today at 177327 is immediately trading down about 21% for the year from last year's settlement of 224531. Up to now, this market has been declining for 2 months and if the market continues to remain beneath the previous month's low of 186058 on a closing basis, then it will remain weak for now. This price action here in May is warning that we may have at least a temporary high in place beginning perhaps a bearish reactionary move on the monthly level if we see lower prices next month or close lower. Otherwise, there remains the potential for a one-month Knee-Jerk reaction low. As we stand right now, this market has made a new low breaking under the previous month's low dropping to 170115 intraday and remains trading beneath that level.

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

ECONOMIC CONFIDENCE MODEL CORRELATION

Here in Russel 2000 Index Cash, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2002. The Last turning point on the ECM cycle high to line up with this market was 2018 and 2007 and 2000.

MARKET OVERVIEW
NEAR-TERM OUTLOOK

The historical perspective in the Russel 2000 Index Cash included a rally from 2002 moving into a major high for 2021, the market has pulled back for the current year. The last Yearly Reversal to be elected was a Bullish at the close of 2021. However, the market has been unable to exceed that level intraday since then. This overall rally has been 1 years in the making.

This market remains in a positive position on the weekly to yearly levels of our indicating models.

Looking at the indicating ranges on the Daily level in the Russel 2000 Index Cash, this market remains moderately bearish position at this time with the overhead resistance beginning at 177867 and support forming below at 172738. The market is trading closer to the resistance level at this time.

On the weekly level, the last important low was established the week of May 9th at 170115, which was down 6 weeks from the high made back during the week of March 28th. We have been generally trading up for the past week from the low of the week of May 9th, which has been a move of .0758%.

INTERMEDIATE-TERM OUTLOOK

YEARLY MOMENTUM MODEL INDICATOR

Our Momentum Models are rising at this time with the previous low made 2018 while the last high formed on 2021. However, this market has rallied in price with the last cyclical high formed on 2021 warning that this market remains strong at this time on a correlation perspective as it has moved higher with the Momentum Model.

Some caution is necessary since the last high 213845 was important given we did obtain two sell signals from that event established during March. That high was still lower than the previous high established at 245886 back during November 2021. Of course, that was the major high in this market, which means we have a downtrend for the past 5 months. Nevertheless, we have elected two short-term Monthly sell signals to date from the turning point of November 2021 on this monthly time level from that major high so there is still important underlying support which needs to be broken to change the trend on this time horizon. Critical support still underlies this market at 154070 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.

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