Market Direction and Stock Trends

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Russell 2000 Index (RUT) »» Weekly Summary Analysis
By: Marty Armstrong | May 27, 2023

Russel 2000 Index Cash closed today at 177302 and is trading up about 0.66% for the year from last year's settlement of 176125. Immediately, this market has been rising for this month going into May reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 170482 while it is still trading above last month's close of 176899 implying near-term strength.

Up to now, we still have only a 1 month reaction rally from the low established during March. We must exceed the 3 month mark in order to imply that 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 1990 moving into a major high for 2021, the market has been consolidating since the major high with the last significant reaction low established back in 1990. The market is still holding above last year's low but is trading rather weak at this moment. 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 2 years in the making.

This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2021. Pay attention to the Monthly level for any serious change in long-term trend ahead.

From a perspective using the indicating ranges on the Daily level in the Russel 2000 Index Cash, this market remains moderately bullish currently with underlying support beginning at 175516 and overhead resistance forming above at 177696. The market is trading closer to the resistance level at this time.

On the weekly level, the last important high was established the week of May 22nd at 181640, which was up 9 weeks from the low made back during the week of March 20th. So far, this week is trading within last week's range of 181640 to 174124. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week's low would be a technical signal for a correction to retest support.

The broader perspective, this current rally into the week of May 22nd reaching 181640 has exceeded the previous high of 181237 made back during the week of April 3rd. Right now, the market is neutral on our weekly Momentum Models warning we have overhead resistance forming and support in the general vacinity of 172582. Additional support is to be found at 174206. Looking at this from a wider perspective, this market has been trading up for the past 9 weeks overall.

INTERMEDIATE-TERM OUTLOOK

YEARLY MOMENTUM MODEL INDICATOR

Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2022. However, this market has rallied in price with the last cyclical high formed on 2021 and thus we have a divergence warning that this market is starting to run out of strength on the upside.

Some caution is necessary since the last high 200731 was important given we did obtain two sell signals from that event established during February. That high was still lower than the previous high established at 203005 back during August 2022. Critical support still underlies this market at 164180 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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