- Posted by Greg Harmon on December 7th, 2016 at 8:25 am
The Russell 2000 has been the work horse of the markets since the election. I have seen many narratives about why this is so. Most take a stance on Donald Trump’s tax policy or trade policy or desire to promote jobs in the US. There is probably something to that. But if you know exactly what those policies are or that they will be passed in short order without any changes, you are a smarter person than I.
I prefer to simplify things. Watching price action is all that it takes. I do not need the tax code proposals or incentives to determine where the Russell 2000 is going. So for me the reason that the Russell 2000 is going higher again is easy. It is all about the ABC’s. Well the ABCD pattern, that is. The chart below explains.
The AB=CD pattern is a simple pattern but with some interesting information. The initial leg from A to B is measured in both price change and time, and then after looking at the pullback to C, the measures for leg AB are added to C for the CD leg. This gives a price target and a time target. For the Russell 2000 ETF ($IWM) this is 149.60 on December 22nd. Truly the workhorse of the Indexes if this plays out.
Take advantage of the Holiday Sale here!
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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