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The Russell 2000’s “inside month”. Ready for a Stock Market Christmas Present?

Stock-Markets / Stock Markets 2018 Sep 28, 2018 - 03:09 PM GMT

By: Troy_Bombardia

Stock-Markets

The Russell 2000 (small caps index) is on the verge of making a DOWN “inside month”. A DOWN “inside month” is when:

  1. The market goes down this month, AND…
  2. This month’s HIGH is below last month’s HIGH, while this months LOW is above last month’s LOW.

More specifically, September has been a DOWN “inside month” after it went up last month (in August).

Traditional technical analaysis (candlestick patterns) sees this as a bearish sign for the stock market because it’s supposed to signify a trend reversal sign. The data proves otherwise.

Here’s what happens next to the Russell (historically) when it makes a DOWN “inside month” after going up the previous month.

As you can see, the Russell 2000 has a very strong tendency to go up 3 months later. Longer term returns (6-12 months) aren’t consistently bearish either.

Here’s what happens next to the S&P 500 when the Russell makes this kind of DOWN “inside month”.

Conclusion

This study suggests that the U.S. stock market will go up for the final 3 months of 2018.

Click here for more market studies.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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