RUT, multiple patterns point to continuation of Bearish trend
There is so much happening in over the last couple weeks that is shifting the overall trend to bearish with the RUT it's hard not to be short on it.
Just to get a couple of things out of the way:
I've been watching this structure develop over the last week or so, and so I am growing in confidence in it.
Monday may be the final confirmation. The Alamo is the convergence of the 3000 SPX line, 200MAs, The lows of the week, and lastly, the breakout zone of the continuation symmetric triangle we find ourselves just barely broken out of in the last few hours on Friday.
Frankly, I think the battle will truly happen in SPY/SPX and RUT will follow.
It should also not be missed that RUT literally is changing composition on Monday. There is much more detailed analysis available out there on that subject, but generally speaking: the small-cap index is getting more mid/larger small caps and much more tech/healthcare heavy. How this change pans out in the longer run, who knows -- but it should be a pretty big shakeup for the individual stocks entering or exiting the index.
Just to get a couple of things out of the way:
- It is damn near silly to think the RUT exists in a vacuum -- it is heavily led by the greater market trends and most especially the SPX. It almost never takes an opposite trend, but it _does_ tend to either minimize or maximize the moves, especially intraday
- This could go either way, we are, on paper, in a bull market trend (for the greater SPX-based market), but just barel. RUT is technically in bear. A major development good or bad would easily reverse sentiment one way of the other and price could travel drastically
- While I am overall bearish, I try to look at the flip side as well, so I can easier tell the difference between reversals and pullbacks in a larger upward move.
I've been watching this structure develop over the last week or so, and so I am growing in confidence in it.
Monday may be the final confirmation. The Alamo is the convergence of the 3000 SPX line, 200MAs, The lows of the week, and lastly, the breakout zone of the continuation symmetric triangle we find ourselves just barely broken out of in the last few hours on Friday.
Frankly, I think the battle will truly happen in SPY/SPX and RUT will follow.
It should also not be missed that RUT literally is changing composition on Monday. There is much more detailed analysis available out there on that subject, but generally speaking: the small-cap index is getting more mid/larger small caps and much more tech/healthcare heavy. How this change pans out in the longer run, who knows -- but it should be a pretty big shakeup for the individual stocks entering or exiting the index.
That said, it was interesting that the RUT decided to essentially take off the afternoon rally and slump back down to just under the 1430 line.
At the moment it is in no man's land sitting under longer term support and right on top the triangle line.
Will be interesting to see how the new components react to a bad day at the office, I could easily see this slide 80 pts in a day with down futures/pre-market/cash market selloffs combined