[divider]
Related Video
11.12.14 “LIVE Mid-Week Update with Kay Kim”
[divider]
Since the early-November of 2014, I have been advocating the possibilities of the Inverted H&S formation on the Russell 2000 Index (RUT/IWM), which when it does form and confirm, it could completely nullify that one-year cultivation (from the sellers) of that ‘major topping pattern’ which I have been talking about and has been formed since the late-2013. In the early-October of 2014, we did see the initial confirmation of that ‘major topping pattern’ when it broke below the summer of 2014 swing-low, but if you have been following my videos/live-events, I have been making a statement that we can’t put too much weight on that initial confirmation on that Russell-breakdown because we do not have same type of sentiment and confirmations on other indices such as the Dow, S&P 500, and the NASDAQ. In fact, other indices continued to convey the sentiment of strong bullish-market while the Russell deteriorated. And because of the discrepancies (between Russell and the other indices), we should not put too much weight on the Russell’s ‘major topping pattern’ activities until the other indices starts to condone Russell’s move. Well, the other indices never decided to endorse Russell but decided to influence the Russell.
Well, today, it seems like we have an early-indication that this ‘major topping pattern’ could be completely nullified while the Inverted H&S (daily chart) might be at a play as an assassin to kill bears-dream (the ‘major topping pattern’) completely. As I have been saying on my videos; when it (the ‘major topping pattern’) gets completely nullified, I do think we might see 1-year of bullish run on the Russell 2000 with $140-$145ish target by the end of 2015 (on IWM).
[divider]
Our Position
[IWM Daily-Chart]
[IWM Daily-Chart]
Currently, the Inverted H&S is now confirming as it is trading well above the neckline (red dotted-line). However, we are currently sitting just beneath the resistance from 1st of the July at $120-$121ish (on IWM), so the question might be that will it pullback down to the neckline-area for a retest this week or will it continue higher. Well, nobody truly knows the answer to that question so the best way to deal with it is to be ready for both scenarios. If it does pullback, I would watch $116 (gap fill) – $118 (neckline) areas to hold before bouncing back up, and if it does that, it will be forming minter-term higher low, so the trend might actually be strengthened. Remember, if you are not a day-trader, you embrace the pullbacks instead of freaking-out.
Historical Perspective
[$RUT Monthly-Chart]
Going back all the way to 1990s, we can see that monthly-20SMA has been a big deal when it is trading in a prolonged/aged/seasoned primary uptrend. Recently, we bounced off of monthly-20SMA and moving higher. History and probability suggests that the Russell 2000 is likely to continue higher in the year 2015 as of today.
Primary Trend
[$IWM Weekly-Chart]
Weekly-100SMA also has been a prominent factor of this trend since the year 2008 as you can see on this weekly-chart. After firmly bouncing off of weekly-100SMA in middle-October, we are now clearing the resistance-level (red dotted-line); As long as we stay above this ‘resistance-level’ on the weekly chart, I do believe it will continue higher.
[divider]
Let’s Recap
- Daily-chart Inverted H&S confirming
- Bounced off of monthly-chart 20SMA
- Weekly-chart 100SMA acted as strong support, and now clearing ‘recent resistance-level’
- As of today, “benefit of the doubt” continues to go to the buyers in the miner, intermediate, and the primary term.
- If we do see any pullback next few weeks, buyers must protect level of $115-$116ish level (on IWM).
- If the sellers manage to get the price well below $112-$110ish on IWM, the ‘major topping pattern’ might be resuscitated
