- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Thursday, 31 March 2016

Looking at the RUT Triangle

The short term patterns on SPX, NDX and RUT from Tuesday's Yellen spike broke down and are forming likely bull flags here. I'm expecting to see those go a bit lower today before breaking up to at least test yesterday's highs. They may reverse at that retest. The ES chart looks supportive of that scenario, though I'm struggling to find another chart to back that up. ES Jun 60min chart (from last night):
If we do see more retracement today the main support I'd like to see hit would be the 50 hour MA on SPX, currently in the 2045 area, though that might be too ambitious. SPX 60min chart:

Now that the rally has extended upwards the question is obviously where how far equity indices will run before reversing. The clearest setup here is on RUT, where a triangle has broken up, retested on Tuesday, and is now in a final thrust up that should be entirely retraced after that thrust ends. These are termination moves so the question then is where the triangle thrust is likely to end. RUT 15min chart:
RUT tested the lower target for the asymmetric double bottom yesterday at 1118, and that could be it. However there is a good trendline case for thinking that a rising wedge is now forming on RUT, and if so trendline resistance would currently be a match with the higher double bottom alternate target in the 1132 area. I won't show the daily chart today but if RUT makes it to the 1132 area then I'd note that there is a larger degree possible channel resistance trendline that I've been looking at in Chart Chat for the last few weeks that is currently in the 1142 area. That could be the main target now. RUT 60min chart:
Yesterday turned out to be a very nice two way day in the end, so the cycle trend day didn't deliver. The other cycle trend day this week is today and the obvious path today would be a morning low followed by a move that would at least retest yesterday's high. The stats lean bearish today though, with Dow down 16 of the last 27 last trading days of Q1, so we could just chop around with a bearish lean today. The stats for tomorrow lean strongly bullish. If the bears want to do any significant technical damage today they need to push SPX back under 2040. On the overall setup here I won't be holding my breath waiting for that.

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