Monday, June 19, 2017

RUT, BKX, SPX: "Seems Unlikely"

Last update discussed the potential that RUT has formed an ending diagonal terminal pattern, and we'll stick with that unless and until RUT invalidates that pattern:

RUT and SPX are (obviously) very different indices -- and SPX has yet to provide any bearish confirmation within its pattern, so it's entirely possible SPX will make another ATH.  Bears would love to see the prior ATH hold, of course.  If we rally today, then the zone around the ATH will be the next test for bulls.

Finally, I'd actually prefer to see BKX head at least a little bit higher, to give this pattern a cleaner resolution:

In conclusion, I'm default bearish on RUT, because I have a hard time wrapping my head around a target north of 45 million, even though I made that target up purely for humorous hyperbole purposes.  In reality, it's unlikely that RUT will exceed 40 million (okay, I'm still running with it!  Make it stop.).  Seriously, though, if that pattern is not an ending diagonal but is instead a bull nest, it is QUITE bullish (maybe not 45 million bullish, but pretty bullish nonetheless) and still hard to wrap my head around.  There have been a couple times since 2009 that I've been surprised by the market in such a way, but that type of surprise hasn't happened since maybe 2011.  So I can't entirely rule out the mega-bull pattern simply based on the grounds of "seems unlikely," as I have been surprised by this bull market a couple times before.  But I can still say:  "Seems unlikely."

Either way, do keep in mind my old aphorism:  "Tops take time."  Trade safe.

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