Two days before the Wilshire 5000 fell 17% in 8 days, I shared that a huge opportunity was at hand at (2) in the chart below. (see post here)
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The Russell 2000 and the Wilshire 5000 seem to be creating quality patterns that one can use towards finding key exhaustion/reversal points.. The Russell seems to be influenced by prices back in 2008 (see Russell Double pattern) The Wilshire above created a very quality “Head & Shoulders” pattern and the H&S seemed to have an impact as the Wilshire declined 17% in 8 days, after a Right Shoulder breakdown.
This broad market index closed this past Friday, at the lows coming off the right shoulder breakdown, testing the early August lows as support. Not only is that low being tested, a couple of other key support lines have come into place at (3), after the index ran out of gas at its 38% Fib resistance level.
At this time…the media is doing an A+ job discussing how bad things are…yet this broad market index reflects that it is very near the same price it was 2 MONTHS AGO!
Rodney Dangerfield made a good living talking about ”I don’t get any respect!” I hope investors continue to respect the “Power of this Pattern” per if this support line (Which IS STILL IN PLACE) gets taken out, a good numbers of investors will jump the fence and head for the hills.
Luke81… Last Wednesday, 9/28, the Russell created one of the largest bearish wicks in years, up against falling resistance, drawn from the right shoulder.
As I mentioned last week, the vast majority of the time a single day pattern does not a trend make, yet this one really caught my eye. A good friend of mine in New Hampshire kids me saying I can find “fly dropping on a bill board at 65 miles per hour!”
Well we all know that is a big stretch for sure, yet when it came to the Russell, this was one GIANT BEARISH WICK at resistance and such a great spot to go short the Russell.
Just think of this…on the spike up the Russell hit 694, this is where premium members bought RWM. Today, the Russell 200 closed at 609 today. This represents a 12%+ decline in 4 business days for the Russell!!! The patterns have been highlighting that “RELATIVE WEAKNESS” should take place in the small caps and it is!
Thanks again for the kind words Luke…Great? Nope! Do I have faith that the “Power of the Pattern” can enlarge our portfolios regardless of market direction? I do!!!
Well Chris, the Russell is surely looking like a good short today!!! -5% versus -3% on the S&P!! This lenghty consolidation is being resolved to the downside, grab a seat on the short-everything express while you can, the Great Chris will let us know when we hit support…
John-Michael…Thanks for the kind words!!! I like to see a close below it, especailly on a weekly basis. Example…Russell 2000 has spiked down into the 630 price a couple of times, yet the “weekly closing low” in early August was 650. This “weekly closing low” I feel is very key and this past Friday, the Russell for the first time “closed on a weekly” basis below the early August low, which was a support price/line.
If GE2 takes place, most investments will shrink in value, some just more than others…I have shared for months that the Russell looks to be a good short.
Thanks for the great question and comment,
I know this is a silly technical question but when you say break support I assume you mean cross the threshold of support not necessarily close below the support line to which you refer.
Thanks for your valuable insight!
What a lucky man to have two radiant daughters!