|Russell 2k Chart|
Russell 2000 or small cap stocks' overall trend, revealed by trends of price, leverage, and time, are defined and discussed in the COT Matrix and Review of Russell 2000 for subscribers.
US stocks, a trend better interpreted by studying the intentions of the invisible hand, continue to defy bearish expectations.
Small cap stocks' focused bull opportunity has produced an impressive 36% annualized gain for the bulls since the fifth week of May (see COT Matrix 05/31/16). This opp recorded a 36% annualized gain after the first week of August. Disciplined bulls that booked partial profits and reduced risk in August are letting their profits run.
COT Matrix 05/31/16
A weekly close above resistance 123.30 to 124.63 (red zone) maintains the up impulse, while a close below the July gap from 117.09 to 117.47 (green zone) pauses it and favors at least a retest of the June swing low (chart 1). Disciplined traders book profits and tighten risk management as small cap test red zone resistance.
On Balance Volume, a crude measure of trend energy, defines accumulation. This favors the bulls.
Small to Large Cap Ratio (SLR)
The long-term trend oscillator (LTCO) defines a up impulse since fourth week of July (chart 2). The fresh up impulse supports continuation of the US stock rally lead by small caps. The small cap bulls control the trend until reversed by a bearish crossover. Compression, the final phase of the CEC cycle, generally anticipates this change.
Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.