Daily Archives: November 20, 2017

The Falling Megaphone on RUT

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A very key pattern that I’ve been watching here for direction is the likely falling megaphone on RUT.This has been a slow developer and has now been forming for an impressive seven weeks. Assuming that this is indeed a falling megaphone then the next target within the megaphone is megaphone resistance, now in the 1511 area, with the main remaining obstacle on the way at the monthly pivot, at 1500 even and tested at the highs today.

Assuming that this is that falling megaphone, then that falling megaphone is a high probability bull flag pattern, and when that breaks up the minimum target will be a retest of the all time high at 1514.4.If that retest can be kept to a marginal higher high then that is the bears’ next decent shot at a larger retracement, though seasonality makes it questionable that we would see that retracement in what remains of 2017. RUT 60min chart: (more…)

Small Caps & High Yield Corporate Bonds Hint of Higher Volatility Ahead

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As can be seen on the Daily comparison chart and percentage-gained graph below, the Russell 2000 Index (RUT) and the High Yield Corporate Bonds ETF (HYG) generally trade lock-step, although the RUT is accompanied by more volatility and larger swings.

At the moment, the RSI and MACD indicators are hinting of lower prices ahead for HYG and volumes have spiked over the past few days.

We’ll see if volatility ramps up and whether any significant weakness hits both of these in the near term…particularly as U.S. Republicans battle to reform and cut taxes before the end of the year. (more…)