This post is just about this single chart, which is the 15 minute bar chart for the /RTY (Russell 2000 small cap) futures:
Zippy Zippy Bang Bang
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The Fib is Holding
Perhaps I’m making too much of it, but I’m impressed how well the Fibonacci has done in pounding the /RTY back down:
China. Again.
The China trade wars from the first Trump administration were tiresome, since they went on for months, jolted the market every time there was an announcement of “trade talks are going well” (it became a meme at the time), and, in the end, resulted in a laughable deal in which, effectively, the United States paid a huge sum of money for the sake of the creation of a few tens of thousands of jobs to make the whole charade look like a success. Suffice it to say, the U.S. didn’t dominate China after those talks were done, nor will they do it this time.
Even so, the fresh memory of the giant rally about a month ago (green tint) based on nothing more than Bessent and China putting a pause on tariffs, compels people to continue to load up on stocks, since Bessent is in London at this very moment doing Round Two with his counterparts from the middle kingdom. I imagine before Tuesday’s session is over, there will be some other flavor of “trade talks are going well, and we’ll meet yet again”. This will go on until the end of 2028.
A Worrisome Stand-Off
I wanted to highlight one particular index which has me concerned (as we ‘celebrate” two months of the market going straight up since April 7th): the Russell 2000. What we have here is a bearish setup (pink) and a bullish counter-setup (green) that are about to go to war. The $RUT broke to a new counter-trend peak on Friday, completing and pushing above the bullish pattern, and if there’s enough power to push the index above the dashed red line, well, God help us, quality of life for equity bears is going to recede from a “2” down to a “1”.
Wake Up!
My natural alarm clock (AKA my brain) fails to wake me up for the market perhaps twice every year, and this morning was one of those times. As one might guess, puppy duties were the cause, which is pretty much the best reason one can imagine, but nonetheless, I was surprised to see the clock read 6:36 a.m. when my eyes popped open.
No harm came of it, however. Of my 25 short positions, 20 of them are down, and the 5 that aren’t are up an average of half a percent, so, meh, I’m fine.
More broadly speaking, the /RTY futures are still sporting a pitch-perfect reversal away from their Fibonacci retracement level and, I would hasten to mention, Bear Force One launches just after the close on Thursday. It’s a BIG trip, too, so if the market plunges on Friday, you know precisely who gets the credit.
