Further to my post of September 15th, and further to Caterpillar Inc's
projections today (Tuesday) for economic growth to be anemic through 2015, if
the Russell 2000 (as represented by its E-mini Futures Index, the
TF) grew at an anemic rate from here through 2015, we may see price hit
950ish by October 2015 if price remained above the 60%
Fibonacci fanline (broken green line) and closed where it meets the first set of
External Fibonacci and Fibonacci Extension confluence levels, as shown on the
Monthly chart below.
Price could, of course, trade
anywhere within the grey shaded zone in a very large 300 point
range if volatility were to increase dramatically during that time
period (the bottom of this range just happens to be around 666)…something that
could happen if a recession were to hit in 2013 to tie in with the enactment of
the Fiscal Cliff policies on January 1st. The pressure may be on for fund
managers to push price higher until the end of this year to, potentially,
provide a cushion against such a scenario.
As usual, I'll be
watching to see if volatility builds on the Russell
2000 Index, as represented by the Daily ratio
chart below of the RUT:RVX. A break and hold
below its lower channel and, subsequently, 37.00 would indicate that
further weakness is to come in Small Caps. Price has, so far, failed to hold at
its all-time high hit last Friday, but closed today above the lower channel, as
well a series of downtrend lines and horizontal price support levels. Volatility
is increasing, along with today's volumes, and the chances of a further pullback
are growing…I'm watching to see if the Momentum indicator crosses the zero
line and accelerates to the downside.
