Trend confirmation
Weekly Chart analysis
SPX vs RUT
My analysis is based on the Dow Theory's 'Concept of Confirmation' to determine the primary direction of the stock market.
In Q2 2020, both the SPX and RUT entered an uptrend. The RUT reached its peak in March 2021, and the uptrend came to an end, with prices moving sideways. Meanwhile, the SPX continued to trend upwards, reaching new highs. The overall trend of the market remained upwards.
The SPX topped out in November 2021 and traded sideways through January 2022. Both the RUT and SPX moved sideways during this time, shifting the overall market trend from 'Upwards' to 'Sideways.'
By mid-January 2022, prices for both the RUT and SPX broke down from their sideways ranges, entering a downtrend from January 2022 through September 2022. The overall market trend shifted from 'Sideways' to 'Downwards.'
In October 2022, prices found a bottom and entered a secondary trend price rally. The primary trend still remained 'Downward,' but it paused as the secondary trend changed direction.
Between October 2022 and September 2023, the SPX experienced a pullback starting an 'uptrend' in the secondary trend, while the RUT began moving sideways in its secondary trend, consolidating in the form of a contracting triangle. The averages were unable to confirm the secondary trend, as they showed differences. The primary trend remained 'downwards.'
In October 2023, the SPX price broke down from the uptrend trendline in the secondary trend pullback. The RUT also broke down from the contracting triangle sideways trend it had been in during the secondary trend. This breakdown in both averages confirmed the continuation of the primary downward trend, signaling the opportunity to enter short trades.
Entering Trade short
SPX
Entry: 4252.75
Stoploss: 4637.05, -9.04%
Target #1: 3598.39, +15.39%, 1.7 RR ratio
Target #2: 2403.74, +43.40%, 4.72 RR ratio
RUT
Entry: 1699.59
Stoploss: 1853.20, -9.04%
Target #1: 1469.87, +13.52%, 1.5 RR ratio
Target #2: 971.05, + 42.87%, 4.72 RR ratio
Weekly Chart analysis
SPX vs RUT
My analysis is based on the Dow Theory's 'Concept of Confirmation' to determine the primary direction of the stock market.
In Q2 2020, both the SPX and RUT entered an uptrend. The RUT reached its peak in March 2021, and the uptrend came to an end, with prices moving sideways. Meanwhile, the SPX continued to trend upwards, reaching new highs. The overall trend of the market remained upwards.
The SPX topped out in November 2021 and traded sideways through January 2022. Both the RUT and SPX moved sideways during this time, shifting the overall market trend from 'Upwards' to 'Sideways.'
By mid-January 2022, prices for both the RUT and SPX broke down from their sideways ranges, entering a downtrend from January 2022 through September 2022. The overall market trend shifted from 'Sideways' to 'Downwards.'
In October 2022, prices found a bottom and entered a secondary trend price rally. The primary trend still remained 'Downward,' but it paused as the secondary trend changed direction.
Between October 2022 and September 2023, the SPX experienced a pullback starting an 'uptrend' in the secondary trend, while the RUT began moving sideways in its secondary trend, consolidating in the form of a contracting triangle. The averages were unable to confirm the secondary trend, as they showed differences. The primary trend remained 'downwards.'
In October 2023, the SPX price broke down from the uptrend trendline in the secondary trend pullback. The RUT also broke down from the contracting triangle sideways trend it had been in during the secondary trend. This breakdown in both averages confirmed the continuation of the primary downward trend, signaling the opportunity to enter short trades.
Entering Trade short
SPX
Entry: 4252.75
Stoploss: 4637.05, -9.04%
Target #1: 3598.39, +15.39%, 1.7 RR ratio
Target #2: 2403.74, +43.40%, 4.72 RR ratio
RUT
Entry: 1699.59
Stoploss: 1853.20, -9.04%
Target #1: 1469.87, +13.52%, 1.5 RR ratio
Target #2: 971.05, + 42.87%, 4.72 RR ratio
Trade closed: stop reached:
SPX: Stoploss: 4637.05, -9.04%
RUT: Stoploss: 1853.20, -9.04%
RUT: Stoploss: 1853.20, -9.04%