Seeing Double in the Russell 2000?

The chart below was the answer to a quiz, reflecting a repeating pattern was taking place in this Russell 2000 inverted chart. The pattern on 7/13 was suggesting that if a decline was to start…now was the time to harvest gains if long. (see post here)

CLICK ON CHART TO ENLARGE

Below is an update of this repeating pattern…

CLICK ON CHART TO ENLARGE

Are you surprised how much the pattern of late looks like the patterns back in 2007-08? I am!!! If this repeating pattern is to continue, one should expect the Russell to be choppy for a while and then run out of gas at a key Fibonacci resistance level.

750 was the 50% retracement level that halted the rally back in 2008. Have a guess where the 50% retracement level is in 2011? 750 again! (FYI-the 38% level comes in around 730)

I believe history repeats, yet it does surprise me to the degree this pattern is repeating. One has to admit the Russell patterns have been great leading indicators for the broad market and until this pattern breaks, I will continue to lean on the Russell for good clues to the next major move of the stock market!

If you are an aggressive investor, the “Power of the Pattern” would suggest to establish inverse positions as close to Fibonacci resistance as possible, with a stop not too far above the 750 level.

7 Comments

Dan Johnson on 08/18/2011 at 9:40 AM

Chris –

I’ll echo the comments of the others, I’ve been following your analyses closely during the past few weeks (although I haven’t commented any). I’ve really appreciated your approach from the beginning and respect that you keep the same balanced approach no matter what the macro environment looks like.

Chris Kimble on 08/18/2011 at 8:42 AM

Thank you spjuliman for your kind words. I remain honored and humbled by this and many kind comments and emails I receive.

In the past few weeks I have been touched by so many of you sharing how the “Power of the Pattern” has brought some peace of mind, due to helping many of you to protect your hard earned monies. Many shared that your family, friends and co-workers were really struggling and scared during the recent down drafts and you had peace of mind, due to stepping aside/harvesting and moving to cash at the highs.

Thanks to all of you again for your viewership and sharing how the “Power of the Pattern” has become valuable to you.
Chris

spjuliman on 08/18/2011 at 1:52 AM

Chris, drawn again to the exact point with a very sharp pencil ! While nobody can predict with certainty what is going to happen, your analysis serves as a valuable guideline when to be “in” or “out” of a market. Thanks so much for 1st-class advice !

spjuliman

Carl V on 08/17/2011 at 9:53 AM

By far the best chart and analysis I have seen for a very long time. Yes I knew about the “market symmetry” and repetitivity but seeing it in action is astounding. Thanks for sharing this Chris!

Chris Kimble on 08/17/2011 at 9:33 AM

Billy…I understand your “faster” comment and conern. Along that line, that is why I shared both the 38% and 50% retracement level, as well as attempting to show that the extremes hit last week, (VIX and Franc), fear needs to cool down first and that should happen with a relief rally.

Investors were very comfortable at the top, which was bearish and now investors have become pretty darn negative. Somewhere along the line the very clean repeating pattern will end, they all do, yet as I shared I will go with it until broken.
Should the Russell hit 750, it will pay to look at the overall conditions at the time.

Thanks to you and all the viewers for your awesome comments. I continue to attempt to provide research that will help people globally to “enlarge their portfolios, regardless of market direction.” I work hard at finding what I hope are productive ideas, yet I remained humbled in that no matter how hard I work, I remain wrong a third of the time. After 31 years of being involved with the markets I have grown of with being wrong a third of the time due to strategies that keep from being “wrong for very long!”

All the best to each of you. I very much appreciate your viewership,
Chris

BillyToro on 08/17/2011 at 9:18 AM

Chris,

Great chart and thank you for your perspective. The difference I see with this next sideways channel is that it may happen faster and breakdown faster.

Billy

Grasshopper..ds on 08/17/2011 at 9:17 AM

Chris that Russell 2000..makes me need to sit down when i look at it.. i believe you are right on ..great call again
fr Denis or grasshopper..much to learn

Dan Johnson on 08/18/2011 at 9:40 AM

Chris –

I’ll echo the comments of the others, I’ve been following your analyses closely during the past few weeks (although I haven’t commented any). I’ve really appreciated your approach from the beginning and respect that you keep the same balanced approach no matter what the macro environment looks like.
Chris Kimble on 08/18/2011 at 8:42 AM

Thank you spjuliman for your kind words. I remain honored and humbled by this and many kind comments and emails I receive.

In the past few weeks I have been touched by so many of you sharing how the “Power of the Pattern” has brought some peace of mind, due to helping many of you to protect your hard earned monies. Many shared that your family, friends and co-workers were really struggling and scared during the recent down drafts and you had peace of mind, due to stepping aside/harvesting and moving to cash at the highs.

Thanks to all of you again for your viewership and sharing how the “Power of the Pattern” has become valuable to you.
Chris
spjuliman on 08/18/2011 at 1:52 AM

Chris, drawn again to the exact point with a very sharp pencil ! While nobody can predict with certainty what is going to happen, your analysis serves as a valuable guideline when to be “in” or “out” of a market. Thanks so much for 1st-class advice !

spjuliman
Carl V on 08/17/2011 at 9:53 AM

By far the best chart and analysis I have seen for a very long time. Yes I knew about the “market symmetry” and repetitivity but seeing it in action is astounding. Thanks for sharing this Chris!
Chris Kimble on 08/17/2011 at 9:33 AM

Billy…I understand your “faster” comment and conern. Along that line, that is why I shared both the 38% and 50% retracement level, as well as attempting to show that the extremes hit last week, (VIX and Franc), fear needs to cool down first and that should happen with a relief rally.

Investors were very comfortable at the top, which was bearish and now investors have become pretty darn negative. Somewhere along the line the very clean repeating pattern will end, they all do, yet as I shared I will go with it until broken.
Should the Russell hit 750, it will pay to look at the overall conditions at the time.

Thanks to you and all the viewers for your awesome comments. I continue to attempt to provide research that will help people globally to “enlarge their portfolios, regardless of market direction.” I work hard at finding what I hope are productive ideas, yet I remained humbled in that no matter how hard I work, I remain wrong a third of the time. After 31 years of being involved with the markets I have grown of with being wrong a third of the time due to strategies that keep from being “wrong for very long!”

All the best to each of you. I very much appreciate your viewership,
Chris
BillyToro on 08/17/2011 at 9:18 AM

Chris,

Great chart and thank you for your perspective. The difference I see with this next sideways channel is that it may happen faster and breakdown faster.

Billy
Grasshopper..ds on 08/17/2011 at 9:17 AM

Chris that Russell 2000..makes me need to sit down when i look at it.. i believe you are right on ..great call again
fr Denis or grasshopper..much to learn

7 Comments

Topic Areas

How The Recent Decline In Stocks Looks "Eerily" Like Major Bear Markets Of The Past