Not much else to say, the chart does a much better job at showing what's happening.
440 support will be a critical area to hold next week.
RUT Daily Chart:
Friday, January 30, 2009
RUT: Lower High, Lower Low = Down
The RUT resisted off the downtrending 20MA and has now formed a lower high to go with it's lower low. This confirms our bias for short term bearish.
Not much else to say, the chart does a much better job at showing what's happening.
440 support will be a critical area to hold next week.
RUT Daily Chart:
Not much else to say, the chart does a much better job at showing what's happening.
440 support will be a critical area to hold next week.
RUT Daily Chart:
Wednesday, January 28, 2009
RUT: Testing the 20MA
The RUT got a boost today and closed up close to the now sideways 20MA on the daily chart. This may hold up as an area of resistance, but once it gets sideways the price is likely to chop around it for a while before another direction gets set. In store, more uncertainty.
The RUT chart now has a lower low, we just have to wait and see when this current rally rolls over to analyze the level of the next high.
RUT Daily Chart:
The RUT chart now has a lower low, we just have to wait and see when this current rally rolls over to analyze the level of the next high.
RUT Daily Chart:
Thursday, January 22, 2009
Volatility Revisited
Pulling out to the weekly charts, both the VIX and RVX are a bit higher this week, but not too bad considering the chaotic price movement the last few days. Looking at these charts it hints a bit in favor of the bulls.
We'll have to see if those topping tails on the weeklies actually work next week.
VIX Weekly Chart:
RVX Weekly Chart:
We'll have to see if those topping tails on the weeklies actually work next week.
VIX Weekly Chart:
RVX Weekly Chart:
RUT: Dancing on the Neckline
The RUT is starting to create a head and shoulders pattern, but appears too weak so far to even create a right shoulder.
Looking at the weekly chart, bulls got excited about the bottoming tail created last week, but thus far it's been negated. Another down day tomorrow (Friday) could take it out completely. The rising wedge pattern continues to work, and a retest of the prior lows on the weekly near the 410 area becomes more of a probability.
RUT lost 460 support earlier this week, but lets see if it can hold on to 440. Without 440 it's a straight shot down to 410 on the weekly chart.
RUT Weekly Chart:
RUT Daily Chart:
RUT Monthly Chart:
The bottoming tail from December has yet to generate a strong reversal.
Looking at the weekly chart, bulls got excited about the bottoming tail created last week, but thus far it's been negated. Another down day tomorrow (Friday) could take it out completely. The rising wedge pattern continues to work, and a retest of the prior lows on the weekly near the 410 area becomes more of a probability.
RUT lost 460 support earlier this week, but lets see if it can hold on to 440. Without 440 it's a straight shot down to 410 on the weekly chart.
RUT Weekly Chart:
RUT Daily Chart:
RUT Monthly Chart:
The bottoming tail from December has yet to generate a strong reversal.
Wednesday, January 21, 2009
RUT: Reverses Intraday After Hitting New Low
The RUT put in a positive day after testing yesterday's low near 430, it closed at 456.76. When it lost 440 yesterday it created an even lower low. This continues to hint that the move to retest the prior 370 lows is ever present.
The RUT is now back in the 440 to 490 range, which will be important to watch. The price is now under the 8MA, 20MA, 50MA and 200MA -- bearish. More importantly, all of these MA's are pointing DOWN. The RUT may get a bounce here as a continuation of today's move, but keep your eyes on the 20MA as it's direction will likely be the light that illuminates the path.
RUT Daily Chart:
The RUT is now back in the 440 to 490 range, which will be important to watch. The price is now under the 8MA, 20MA, 50MA and 200MA -- bearish. More importantly, all of these MA's are pointing DOWN. The RUT may get a bounce here as a continuation of today's move, but keep your eyes on the 20MA as it's direction will likely be the light that illuminates the path.
RUT Daily Chart:
Monday, January 19, 2009
RUT: Head and Shoulders?
The RUT formed a LOWER LOW on the daily charts that is bearish no matter which way you slice it. The 440 first target of the broken rising wedge was hit in just 4 days.
The short term uptrend was broken, and in the context of an intermediate downtrend the next little rally is likely to form a lower high which will then create a Head and Shoulders pattern.
The possibility still exist for the market to fall straight down from here too, so all those options are on the table now. We'll just wait to see if 460 can hold tomorrow for starters. The upside target for an "Obama Rally" would be 490. The 440 area would be the first target to the downside.
We are now able to draw our neckline and downside targets IF the H&S Pattern plays out.
RUT Daily Chart:
The short term uptrend was broken, and in the context of an intermediate downtrend the next little rally is likely to form a lower high which will then create a Head and Shoulders pattern.
The possibility still exist for the market to fall straight down from here too, so all those options are on the table now. We'll just wait to see if 460 can hold tomorrow for starters. The upside target for an "Obama Rally" would be 490. The 440 area would be the first target to the downside.
We are now able to draw our neckline and downside targets IF the H&S Pattern plays out.
RUT Daily Chart:
Wednesday, January 14, 2009
RUT: Break of 460 Creates Lower Low
The rally has come to an end with today's close below 460. When this current down draft halts and it starts moving up again it will have formed a lower low on the daily charts and likely a lower high.
Next level of horizontal price support is at 440, so that would be the first target. There's also a 161.8 fib target at 425.97.
RUT Daily Chart:
Next level of horizontal price support is at 440, so that would be the first target. There's also a 161.8 fib target at 425.97.
RUT Daily Chart:
Tuesday, January 13, 2009
RUT: Downside Fib Targets
With the RUT breaking the rising wedge, it seems appropriate now to take a look at some downside targets should this pattern get some follow through.
The key level for the RUT to hold is 460. If 460 is breached it will be a 100% retracement of the 5 day (low volume) rally that started on December 30th. A close below 460 on the daily charts would create a lower low and put into to question this little (bear flag) uptrend.
The fib targets to the downside are 161.8% at 425 and 261.8% at 368.
There are 2 conflicting patterns now that both confirmed, one to the upside and one to the downside. The upside pattern was the reverse head and shoulders and the downside pattern was the rising wedge. If the RUT stays above 460 then the downside numbers were just a fun exercise and the upside targets would be 490, 500, 520, 550 and 580. The reverse head and shoulders target to the upside is 580. This would be a strong area of resistance (brick-wall like) and a likely area to produce a strong bounce downward.
RUT Downside Targets on Daily Chart:
The key level for the RUT to hold is 460. If 460 is breached it will be a 100% retracement of the 5 day (low volume) rally that started on December 30th. A close below 460 on the daily charts would create a lower low and put into to question this little (bear flag) uptrend.
The fib targets to the downside are 161.8% at 425 and 261.8% at 368.
There are 2 conflicting patterns now that both confirmed, one to the upside and one to the downside. The upside pattern was the reverse head and shoulders and the downside pattern was the rising wedge. If the RUT stays above 460 then the downside numbers were just a fun exercise and the upside targets would be 490, 500, 520, 550 and 580. The reverse head and shoulders target to the upside is 580. This would be a strong area of resistance (brick-wall like) and a likely area to produce a strong bounce downward.
RUT Downside Targets on Daily Chart:
Monday, January 12, 2009
RVX: Next Stop 55?
The RUT Volatility Chart B-lined to test support, and bounced hard. Now Where?
RVX Daily Chart:
RVX Daily Chart:
RUT: Rising Wedge Broken
The RUT Broke down to close below the 8MA, 20MA and 50MA. It also closed below the upward trendline confirming the break of the rising wedge. The uptrend is still holding up technically on the daily chart, BUT it will need to hold above 460 this week in order to retain the higher low.
Here are a couple observations of the daily chart:
- After the huge 3 month move down in Sept, Oct, Nov, it was technically probable that it would retrace at least 38.2% (520), if not 50.0% (567). So far it has retraced 38.2%
- Since the RUT is in an intermediate downtrend, a bear flag formation is/was probable. Now it appears to be breaking down.
- The average trend is 3 to 5 legs, this 6+ week rally has had 4 legs so far.
- The last bear flag in Oct preceded a 180 point drop to the 370 area.
- If the current bear flag produces a similar 180 point drop the target would be 350.
- The intermediate trend is still down.
RUT Daily Chart:
Here are a couple observations of the daily chart:
- After the huge 3 month move down in Sept, Oct, Nov, it was technically probable that it would retrace at least 38.2% (520), if not 50.0% (567). So far it has retraced 38.2%
- Since the RUT is in an intermediate downtrend, a bear flag formation is/was probable. Now it appears to be breaking down.
- The average trend is 3 to 5 legs, this 6+ week rally has had 4 legs so far.
- The last bear flag in Oct preceded a 180 point drop to the 370 area.
- If the current bear flag produces a similar 180 point drop the target would be 350.
- The intermediate trend is still down.
RUT Daily Chart:
Thursday, January 8, 2009
RUT: Higher Highs and Higher Lows
The RUT continues to confirm the short term uptrend and successfully supported at the up-trending 8MA today.
Upside targets based of fibs would be 520 for the 38.2% and 567 for the 50% retracement. There's some horizontal price resistance at 550 so that if broken will get the bulls thinking that life is sweet again, but to be real it will have to retest and hold that area too.
If we revisit the target of the confirmed reverse head and shoulders, 580 becomes the upside target.
Although the RUT broke the primary uptrend line (dotted green), it's still holding on to the secondary. At the same time, it's forming a rising wedge which is a bearish pattern. We'll have to watch closely to see which of these patterns wins out.
RUT Daily Chart:
Upside targets based of fibs would be 520 for the 38.2% and 567 for the 50% retracement. There's some horizontal price resistance at 550 so that if broken will get the bulls thinking that life is sweet again, but to be real it will have to retest and hold that area too.
If we revisit the target of the confirmed reverse head and shoulders, 580 becomes the upside target.
Although the RUT broke the primary uptrend line (dotted green), it's still holding on to the secondary. At the same time, it's forming a rising wedge which is a bearish pattern. We'll have to watch closely to see which of these patterns wins out.
RUT Daily Chart:
Sunday, January 4, 2009
The Volatility Charts
I haven't posted any of the volatility charts in a while so I decided to post the RUT and SPX levels to locate some S & R levels as well as look at some possible ranges it may stay in for the next few months. I took the "log scale" off so you can see visually how wild this move actually was. I may allow you to start plotting a potential VIX range in the upcoming months. Right now the range is so huge that we'll need to see the next level of support to help us connect the dots.
Technically, both charts have broken below the 20MA and now seem to be on target to test the red 50MA. However, last weeks rallies were on light volume, and could collapse just as quickly next week. We have seen this happen many times in the past, and this time we actually have a longer term downtrend to help.
Regarding RUT, I must still follow what the charts are telling me, but with 3 aggressive days up in light volume I need to be prepared to take advantage of a pull back which could end up turning into a longer move. This move off the bottom has made 4 legs so far into 500 resistance so we'll see this week if it creates an exhaustion move before heading lower or if the bulls decide they want to take it up for a while longer. Next target for me is 520, then 550. At 550 I start scaling (small position) into some short positions regards of what the news is. That is NOT a recommendation, but the charts and past behavior suggest that if the RUT does move to 550 (strong resistance) then a pull back to 500 or lower is probable. This all in the context that we are in a downtrend and I want to go with the prevailing trend.
This brings us back to the volatility charts. The VIX has pulled back to some old resistance extremes and it wouldn't be surprising at all the see the market pull back strongly next week after hitting this target. If the market does continue to rally next week the bears will start salivating as this will just give them better low risk entries to the downside. It will be interesting for the SPX.
On the RVX side of things, it appears that the RUT could easily rally a bit longer to allow the RVX to drop more down to a support level like 45 or 40. I'll be watching those volatility levels very closely this week.
VIX Weekly Chart:
RVX Weekly Chart:
Technically, both charts have broken below the 20MA and now seem to be on target to test the red 50MA. However, last weeks rallies were on light volume, and could collapse just as quickly next week. We have seen this happen many times in the past, and this time we actually have a longer term downtrend to help.
Regarding RUT, I must still follow what the charts are telling me, but with 3 aggressive days up in light volume I need to be prepared to take advantage of a pull back which could end up turning into a longer move. This move off the bottom has made 4 legs so far into 500 resistance so we'll see this week if it creates an exhaustion move before heading lower or if the bulls decide they want to take it up for a while longer. Next target for me is 520, then 550. At 550 I start scaling (small position) into some short positions regards of what the news is. That is NOT a recommendation, but the charts and past behavior suggest that if the RUT does move to 550 (strong resistance) then a pull back to 500 or lower is probable. This all in the context that we are in a downtrend and I want to go with the prevailing trend.
This brings us back to the volatility charts. The VIX has pulled back to some old resistance extremes and it wouldn't be surprising at all the see the market pull back strongly next week after hitting this target. If the market does continue to rally next week the bears will start salivating as this will just give them better low risk entries to the downside. It will be interesting for the SPX.
On the RVX side of things, it appears that the RUT could easily rally a bit longer to allow the RVX to drop more down to a support level like 45 or 40. I'll be watching those volatility levels very closely this week.
VIX Weekly Chart:
RVX Weekly Chart:
Friday, January 2, 2009
RUT: 3 Days Up, Now What?
The RUT enjoyed a light volume rally for the past 3 days, but now that it's technically moving away from the 20MA and 50MA, the days of this rally are likely numbered. The key now will be to see if the pull back holds or if the 4 legs up it just took are just a nice fat bear flag. Maybe it will take one more leg, making it an odd 5 before it cracks lower?
One can't fight what the charts are saying, "higher highs and higher lows," but we are in an intermediate downtrend so at some point it will likely be a bear flag. Don't fight it, just be aware of what it likely is.
RUT Daily Chart:
One can't fight what the charts are saying, "higher highs and higher lows," but we are in an intermediate downtrend so at some point it will likely be a bear flag. Don't fight it, just be aware of what it likely is.
RUT Daily Chart:
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