Russell 2000 Market Prediction Update For 9-28-2017

The Russell 2000 crushed the market prediction path and exploded higher this week on Republican’s tax plan. The idea is that small cap stocks are mostly domestic companies that are less able to take advantage of tax loop-holes and so they are the companies that will benefit the most from tax cuts.
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Russell 2000 Index Prediction Signals Pullback Coming

The Russell 2000 index prediction was very accurate last week as the Russell followed the predicted path (green line) very closely last week as seen in the chart below.

Russell 2000 Index prediction shows market down week ending September 29, 2017

The Russell 2000 is predicted to pullback next week and retest its $140.89 support level by mid-October. Sometime in late October, we will be looking at going long the Russell 2000 index in anticipation of November and the start of the best 6 months of the year for trading.
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Russell 2000 Ichimoku Chart Warning Signal

The Ichimoku Cloud chart of the Russell 2000 has given a warning signal. The Tenkan-sen (blue line) is making a serious test of the Kijun-sen (red line) for the first time in 2017.

Notice how the Russell 2000 bounced down off of the Kijun-sen (red line) last week. If this 1400 level is not taken back next week, we could see the Tenkan-sen cross below the Kijun-sen for the first time since August 2015.

Stock Market Correction and Waiting To Click The Buy Button

The stock market correction is likely going to push the S&P 500 to test its long-term rising trendline and support at 232.20. The bearish divergence on the Twiggs Money Flow likely signals that the pull back is not over yet.

Short-term stock market correction underway.

A few traders have asked me if now is the time to buy or if they should wait on the sidelines while the market pulls back. We all know that history does not predict future price direction nevertheless, it is useful to know what has and hasn’t happened in the past.

Looking at the last 110 years of stock market price action, the data reveals that waiting for a correction when the market was expensive would have reduced investor returns significantly. The reason is that the term “expensive” is a subjective term. Even if you use a more objective approach of looking at the P/E ratio, the data still shows that staying out of the market for months or even years waiting for a correction is a losing strategy.

Where long-term investors get themselves in trouble is that the correction they are waiting for may occur at a much higher market level than it is at today. Also, sitting on the sidelines for months or even years runs the risk of the investor losing patience and ultimately capitulating to the Bulls and buying back in to the market at a much higher level.

Few investors believe markets efficiently follow a random walk even though it’s a key component of market theory.

Short Term Stock Market Correction

Timing a stock market correction for profits is best done using a short-term swing trading strategy. The idea is that you don’t want to try and catch a falling knife.

Looking at QQQ, the Russell 2000, and the S&P 500, over the last week, you can see that the Russell 2000 and QQQ are leading the S&P 500 lower:

In stock market corrections, the Russell 2000 usually leads the other major indices lower.

The market is telling us that what happens in the FANG stocks and QQQ will likely dictate market direction on the S&P 500.

With the Twiggs Money Flow breaking below zero for the first time in 2017, I think a retest of the $136 support level is likely.

Right now being in cash is an excellent move. Continue to stalk your favorite stocks for a swing long entry. I wouldn’t be too quick to jump back into this market yet. Consider using stop limit orders as taught in the lesson here.

The main thing to watch out for is the Establishment ‘Defeat Trump’ propaganda in the WSJ, CNBC, CNN, and elsewhere. These media groups are so dishonest that some were even claiming that the stock market went up because Steve Bannon left the White House. That was the propaganda narrative with CNBC claiming that traders on the NYSE floor cheered as proof. First of all, those old left-leaning talking heads in stock exchange clothing walking around looking stupid on the NYSE floor are not representative of the stock market as a whole.

Just as the Establishment media was advancing the false narrative that markets were up because of Steve Bannon being out at the White House, markets turned back down and so they quickly killed that false narrative. Another example is CNN’s propaganda that the entire market is worried because of Trump.

For the first time in our life-times, we have a President who is exposing the Establishment propaganda media in this country. There is a major information war going on right now.

As a trader, you can’t get caught up in the propaganda and the power struggle going on for control of public perception. You have to check yourself every day and make sure you aren’t making trading decisions based on propaganda. If you think the mainstream media is getting into your head too much, cancel your subscriptions like I did with CNBC Pro last week, and the WSJ and Barron’s the month before. Just turn it off because these propaganda machines are not going to help you make more money at stock trading.

Remember folks, markets mostly do random walks, especially during intra-day trading. No left-leaning propaganda media outlet can peer into the minds of millions of traders around the world and claim to know what they are thinking. These propaganda publications believe that perception is reality so if they can control the public’s perception, they can control reality.

The U.S. stock market is overbought, and the weak seasonal period is upon us. May through October marks the weakest 6 months of the year.

I don’t want to beat up on the mainstream media too bad so I’m not going to mention where I read the following bogus analysis:

Overbought markets look for excuses to sell off. Will Trump’s lack of leadership become an excuse for a big selloff in stocks?

The mainstream media is actually talking about a stock market correction as if it is some type of external beast that thinks for itself and makes up excuses. Reality check: you and I are the markets. People that work at institutional trading firms and hedge funds are the markets. Are you looking for an excuse for the market to sell off? I’m not either. Nobody is. We’re just reading the charts, analyzing the fundamentals, weighing external news events, and making our decisions. Nobody is searching under desks and looking everywhere for excuses to sell out of their positions. Especially not some make-believe entity called Overbought Markets.

Did you notice the Establishment propaganda “Trump’s lack of leadership…”? You can criticize the President on a lot of things but one thing you can’t criticize him on is a “lack of leadership”. President Trump is a strong leader with strong ideas and a vision on which he is moving to execute those ideas. Get in his way and “you’re fired”. Trump demonstrated his very strong leadership skills for over a decade on the hit-show The Apprentice. President Obama isn’t even in the same ballpark as President Trump when it comes to having strong leadership skills.

Mainstream media propaganda about stock market corrections.The main factors influencing a short-term stock market correction right now are: the speed of Fed rate hikes and balance sheet reduction, North Korea, the debt-ceiling, the economy, and the speed at which the Trump America First agenda is moving forward. Anything outside these main themes is likely Establishment propaganda by powerful groups battling to control public perception and thus reality.

First Bancshares Rising Large Players Volume on Earnings Beat

First Bancshares stock has rising large player volume on an earnings beat. First Bancshares reported Q2 EPS of $0.44 versus the $0.36 estimate. Revenue also beat coming in at $20.2 million versus the $18.9 million estimate.

First Bancshares has been making interesting merger and acquisition moves over the last year. Last quarter, the Company’s common stock was included in the Russell 2000 Index for the first time.

First Bancshares Stock Chart

Large players volume has been slowly rising as the stock has dropped. That positive diverge is also confirmed by the Twiggs Money Flow. Both large players volume and the Twiggs Money Flow favors the Bulls.

FBMS is an ok setup but it doesn’t really thrill me though. Yes, prices have been consolidating lately and the volatility has been reduced setting up a momentum squeeze.

What I don’t like about this momentum squeeze setup is that the stock has been signaling a such a squeeze for many months now. Ideally, we want stocks that swing hard on a momentum squeeze signal. This stock clearly does not do that which is bearish IMO.

There is a resistance zone just above the current price starting at 27.18. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 26.94, a stop order could be placed below this zone. We notice that large players showed an interest for FBMS in the last couple of days, which is a good sign.

GO HERE TO CHART LARGE PLAYERS AND THE TWIGGS MONEY FLOW LIKE THE CHART ABOVE… AWESOME TOOL

Stock Market Technical Analysis Blog For 6-15-2017

The stock market technical analysis blog posts a market update for June 15, 2017. The S&P 500 is holding up better than the Nasdaq and Russell 2000. Being that both these markets usually lead the S&P 500 higher, it’s a divergence that traders should take notice of.

Stock Market Technical Analysis Blog

In today’s video blog, I go over the charts of the Nasdaq, S&P 500, and Russell 2000. In addition I talk about two sectors I like right now which are natural gas and gold. What I don’t like for an entry right now is oil. I know a lot of you have taken an entry in oil but I would prefer to wait for consolidation before trying to catch a falling knife.

Russell 2000 Index Fund Headfake to the Upside

The Russell 2000 index fund IWM has broken down once again after a lot of traders got excited with the strong move up last week. It was a massive headfake that burned a lot of traders. So wicked. So evil.

Russell 2000 Index Fund

That headfake is just wrong on so many levels. This is the kind of market action that’s pushing traders into bitcoin and markets that are not dominated by HFT, algos, and quant trading desks.

Many traders were thinking that after the downtrend channel breakout and then the convincing break above $139.50 resistance, that perhaps a trend change was at hand on the Russell 2000 index fund. Institutional traders basically told amateur traders no such luck suckers. Now let’s see if the $136 downtrend channel line holds.

Don’t Double Down On Wrong Prediction, Just Move On

Whether we are talking about individual stocks, the stock market, or the economy, when you’re wrong just admit it and then move on. The goal is to make money, not to be right 100% of the time so you can stroke your ego.

AM TV and Peter Schiff predicted that the Federal Reserve could not stop their monthly QE injections into the economy. Even though the Fed kept cutting the monthly injection all the way down to zero, alternative media outlets AM TV and Peter Schiff kept saying the Fed wouldn’t stop the monthly infusions because they couldn’t as the patient (the economy) would die. Peter Schiff then went on to say that the Fed was not going to hike rates in December 2015 but instead actually cut rates. The Fed increased rates a quarter point right on schedule. For all of 2016, Peter Schiff has been saying that the Fed isn’t going to hike rates again but instead reverse course and lower rates. In December of 2016, the Fed will likely increase rates another quarter point.

Most alternative media outfits think they have to be crazed perma-bears to get viewers. Maybe they do. Rather than AM TV and Peter Schiff admitting they were wrong about the Federal Reserve, they double down on their wrong predictions and do another “interview” together, check it out.

There are some really good points in this interview, don’t get me wrong. However, to be a successful traders and investor, you can never be a perma-bear. You can never be a perma-bull. You have to adapt and respond to market conditions. That adaptation means you have to be willing to admit when you’re wrong and then to just move on.

Folks, watch out for fear mongering. Fear drives viewership and video view counts on YouTube but being forever fearful is a great way to lose all your money at trading. Some parts of the economy will no doubt suffer under a Trump Administration and higher interest rates; however, higher rates will be good for other parts of the economy like Banking. A Trump Administration will be bad for multinationals and the Dow and parts of the S&P 500; however, Trump will be great for domestic businesses and the Russell 2000.

Small Cap Stocks Will Outperform In a Trump Administration

Small cap stocks are the place to be in a Trump Administration. Trump’s economic policies will negatively impact large multinational corporations like Apple. Small cap stocks are all about domestic companies.

Small cap stocks generate most of their profits inside the US, exactly where Trump’s economic agenda is targeting.

Since Election Day, small cap stocks on the Russell 2000 Index have surged 12.3%, far better than the 3.05% gain for the large-company S&P 500 stock index, and the 3.6% gain for the Nasdaq.

A massive amount of money is moving into small caps. The Russell 2000 has closed up for 14 days straight since Trump won the election.