Shorting Russell 2000, Joe says nice looking breakout

joefridayrussellinversebreaksoutsept4

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The Russell 2000 inverse ETF (RWM) has had a rough 6-years, falling a ton in price ($500 to $62). If one has owned if for a long-time, its not been fun to say the least.

A couple of weeks ago RWM broke above triple resistance at (1) above and Premium Members bought the ETF on the breakout.

At this time the price action looks ok.

Should RWM break above $66, it has the potential to take off!

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Change investment allocations due to .2% of a move?

guys arguing over correction pic

Can you believe that its a really big deal to some if an index is down 9.9% from it highs (non correction territory) or if its down 10.1% (correction territory).  Does .2% constitute that we make a different allocation decision? Are you kidding me?

Do you find yourself agreeing more with the person on the left or right? I am in the camp with Lou on the right. Should we make investment decisions based upon a term (correction)? Not me

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This chart looks at the Dow since 2010 and looks at trend channels and Fibonacci retracement levels.

The Dow has been in a well defined rising channel over the past 4-years, touching resistance numerous time and creating support back in 2011. The decline last week did nothing more than take the Dow down to the bottom of this rising channel.

I applied Fibonacci retracement levels to the 2011 low and the highs this year. As you can see the 23% level was hit at (1) this week, at the same time it was hitting the bottom of this rising channel.

Should you make investment decisions based upon the market being down 9.9% or if its down 10.1%? Good luck if you do.

Humbly I have a bias and its following the price action and trends billions of free thinking people create.

Despite the decline since the highs in May, this intermediate 4-year trend remains in tact. If support at (1) breaks, then I would be looking to make some allocation changes, not whether is in “correction mode or not!”

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Long-Term bull market still alive, trend support is where?

big bull pic

The S&P 500 is now down around 7% on the year. Is the very long-term bull market still in play? Yes it is!!!

The chart below looks at the NYSE Composite on a monthly basis, dating back to 1965.

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As you can see, since the mid 60’s, the NYSE composite has remained inside of rising channel (A). The last time the top of the channel was touched was in the late 1990’s and the last time the bottom of the channel was touched took place back in 2009.

Despite the quick down turn of late, this long-term rising channel remains in tack.

Some things that caught my attention in the above chart

(1) – The NYSE hit mid-range parallel resistance a few months ago and of late has broken below support off the 2009 lows.

(B) – Monthly momentum reached lofty levels recently (last seen in 1987, 1999, 2007 and now) and momentum has started to turn lower. It could matter that monthly momentum has been creating a series of “lower highs” over the past 17-years.

From a 30,000 foot view, the 40-year rising bull trend remains in tact!

Now that the 2009 support has given way, which is something to respect, where does long-term support come into play?

(2) -The last time the NYSE touched the bottom of this rising channel was back in 2009, as it stopped on a dime at support, during the financial crisis. The support line now comes into play at the 7,666 level, which is around 20% below current prices.

If you are a long-term bull and like to play long-term rising channels, you should feel good that the long-term trend is still up and 40-year support has not been broken.

These would have my attention if you are looking to make some shorter-term observations/decisions… support is a long way away, 6-year support has been taken out recently and monthly momentum is still lofty and has made a series of lower highs over the past 15-years. Some might view these lower highs as a divergence against the long-term trend and a potential negative for the time being.