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)


Below is an update of this repeating pattern… 


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.


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