Simplistic Technical Analysis of the Russell 2000 (January 18th 2015)

I am resuming the practice of posting simplistic technical analysis. This time, we are looking at 1 year candlestick chart for Russell 2000 on Yahoo stocks, with the following indicators on the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9
4. 14 day Money Flow Index

We can see that the stock is now trending up with higher highs and higher lows. Also, 15 day Simple Moving Average (SMA) is above the 50 day Simple Moving Average (SMA) which is above the 200 day Simple Moving Average. All these to me are bullish indicators.

Based on above, we can see that the Russell is setting itself up for going higher (highlight 1). The MFI has moved fallen indicating a push higher is imminent (highlight 2). However, the MACD divergence has sloped down indicating that downward pressure is no longer there. Given indicators 1 and 3, it seems these are bullish indicators hinting that the index has room to move higher.

Based on the above, my amateur predictions are as follows:

1. The index will move higher to 1220 to 1250 points within a month from now.

2. The index could push all the way higher to 1280 or beyond by mid March.

Please do your own research before making any financial decisions.

Simplistic technical analysis for Russell 2000 (November 8th 2014)

Last week I had predicted that against all expectations, the Russell may push higher before reversing itself by end of the week.

The way things actually proceeded was that the Russell moved sideways and ended the week pretty much at the same place as last week.

Again, we are looking at 6 month candlestick chart for Russell 2000 on Yahoo stocks, with the following indicators on the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9
4. 14 day Money Flow Index

Looking at the above, we can see that the Bollinger band has broadened, giving the stock room to grow (highlight 1). The MFI has moved sideways from last week indicating that a downward movement is likely but not guaranteed (highlight 2). However, the MACD divergence has sloped down indicating that downward pressure has reduced. Given indicators 1 and 3, it seems these are bullish indicators hinting that the index still has room to move higher.

I would also like to include the following chart... XLE (Energy index), XLP (Consumer Staples) and XLY (Consumer Discretionary). We can see that XLY is quite correlated to the Russell. The Discretionary spending outlook is weak indicating that Russell will continue its long term down ward trend eventually.

Based on the above, my amateur predictions are as follows:

1. The index will move higher by 10 or 15 points in the coming week (1185-1190) , before starting to fall.

2. By end of second week, the index would again fall marginally below 1180.

Please do your own research before making any financial decisions.

Simplistic technical analysis for Russell 2000 (November 2nd 2014)

In my last week's post I had speculated that Russell 2000 would touch 1160 and then a reversal would take place. However, this week, against all expectations Russell continued to move higher beyond 1160 and closed beyond 1173.

Lets see if we can assess the next moves for the index for the coming week.

I am using the following indicators

We are looking at 6 month candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

I have also added a fourth indicator

4. 14 day Money Flow Index

Last week, the Russell had ended the week at 1118.82 and 1160 seemed far away. In one week the index climbed more than $55 to end at $1173.51. There was also a Breakaway gap on October 30th where the stock went from a previous day close of $1155 to next day open of $1169 (see item 6 on chart above), indicating some market news that raised market expectations. Whether it was the Feds announcement or Japanese announcing their own quantitative easing, or a combination is difficult to tell.

Looking at the MACD indicator, it has already touched 10.35 (item 1 in chart above). I was expecting a reversal above 7.35 indicated in my last week's post. The market is in overbought territory but is not done. So where do we go from here?

If we look at Money Flow Indicator (MFI), which is a lead indicator that combines 14 day price and volume movements, lets look back to beginning of October (item 2). It was a downward trend, but the MFI indicated an upward trend. It implied that a reversal would happen at some point. The stock fell further and then reversed.

However, if we look at current MFI (item 3), it is at 77 odd. While it supports that the stock is overbought, a value above 90 would have indicated unsustainable overbought levels. The present value does not indicate so. To me, this means that the upward trend will continue till we see a reversal or flattening out on the MFI. If we look at previous 6 month highs (item 5) we can see that MFI flattened first while price continued to rise a little bit before the trend reversed (item 7). MFI was at 72 odd when it reversed in that particular instance.

Again, coming to my amateurish predictions, I suspect the following:

1. The start of week the uptrend will continue to push index higher.

2. Russell 2K will continue to test previous highs at 1183 (item 4) and even 1208 (item 5).

3. Perhaps by end of next week we will see the beginning of the reversal.

Once again, I am learning technical analysis, so please do your own research before making any decisions.

Simplistic technical analysis for Russell 2000 (October 26th 2014)

In my previous week's post, I had suggested that the Russell 2000 Index will rise to 1160 and then fall. This past week the index did rise as suggested, but not all the way to 1160 as yet. The index reached 1120 and I think it will continue that trend till 1145-1150 by the end of the week.

In terms of technical analysis, I will use the similar set of indicators as previous week, with minor changes.

We are looking at the one year candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

If we look at past week's action, the overall downward trend continued from July 2014 (shown by red arrows 1 and 2).

The daily candlestick formation indicates a pause before the stock will continue the upward trend in the near term (next 3 to 4 days). This is highlighted in the red boxes (5, 4 and 3) to compare with historical trends.

The short term reversal will start perhaps middle to end of next week, as the index touches the top of the bollinger band as well as MACD divergence histogram touches 7.3. The MACD and signal however are much below zero indicating that the price will continue higher in the short term though at perhaps a slower rate.

My amateurish predictions:

1. The index price will now rise at a slower rate (with temporary pullbacks on some days of the week)  to 1150 -1160 towards the end of the week.

2. The reversal will not start before the end of the week, by end of 2 weeks we may see the price testing new lows at 1030 or lower.

Simplistic Technical Analysis for Russell 2000 (October 19th 2014)

I am fairly new at trying to do technical analysis. But in this post, I thought I will give it a shot. I am looking at the Russell 2000 to understand the direction it will take.

We are looking at the one year candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 26 days and 2 Standard deviation
2. 15, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

The way I see it, based on last trading day of Friday 17th October 2014 the stock is set for a short term reversal. It has bottomed out at the 52 week low, and is set for a short term reversal, but for a further fall in the medium term.

There are a few things to consider.

1. Overall we are getting lower highs and lower lows, so long term trend is down. (Red arrows in the chart).

2. The latest down turn included three consecutive days of losses, which indicates the secular trend is down as well. (Indicated by red squares on the chart)

3. This is different from indicators of a reversal where we start with morning stars and end with evening stars (indicated in green boxes). Here we start with evening stars and end with morning stars meaning, the chart is failing to break a falling resistance line.

My amateurish predictions:

1. The index will rise to 1150 or 1160 in the near term (under a week), and then reverse and fall 70 to 100 points.

2. By end of 2 weeks, the index will be at 1040 or 1060.

This is my line in the sand. Lets see how it pans out.