Projections for the Russell 2000 monthly - 06-18-10

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Projections for the Russell 2000 monthly - 06-18-10

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Trend bar counts are showing back to 1992.  Notice the PhiCube lengths.  A "miss" of a couple of bars is still within tolerance, like the 31 bars ending in 2002.  That's close enough to 34 to be acceptable.

The benefit of an exercise like this as shown on the chart is to build a framework of expectations.  You can then test the "hypothesis" and make adjustments as needed as time passes. 

If price develops along an expectation, you can use your technical analysis tools to refine your trade entries and exits.

Of course, analysis such as this can be done for any symbol in which you have interest if there is sufficient data.  If there is a very wide range between high and low on your chart, like 10 to 100, or vice versa, like 100 to 10, you will need to make adjustments in order to make indicators "legible".

NOTE:  Click on the image to view full size. Clicks 1 and 2 enlarge and 3rd drops it back to 1st enlargement.   Or, Click on Previous at the top of the window to return to the full posting.

Here's another view without as much detail (SnagIt 10 used for annotating.)

  • Notice on your own monthly chart of the Russell 2000 that it reversed a couple of months later at its PhiBo144 (500) midpoint.  That indicates a stronger reversal than if it reversed at the 382 or 214 or MinLow. When such a condition occurs, it indicates that the 786 will most likely be exceeded and that the MaxHigh is a high probability target to at least be reached.  Other tools will need to be used to evaluate whether or not there will be a failed or successful test of the high.

    In this case, one can use the DJIA data from Yahoo! (^DJI or TCNet (DJ-30) to get enough data.  Using that data, you will see a 786 retracement  of the DJIA at the PhiBo144 (786).(This is the same because the 2009 reversal established a MinLow 144 for that fractal, Fractal 7.)  Since that 786 is 990 points higher for the DJIA and the DJ Transports look like the Russell 2000, a workable hypothesis is that the DJIA will reach its 144(786) at about the same time as the R2K and the DJT reach their MaxHigh,  The DJIA will have to struggle to get to that 786 because it has a falling PhiBo34(786) momentum zone.  However, the PhiBo34 has formed a (786) cradle just above the PhiBo144 (500) midpoint in mid-2011, which strengthens support.

    How long will it take for this hypothesis to prove out?  Up to a year, i.e., 34 months from the 2009 low?

    Something to watch is how the DJIA responds to that falling 34(786) resistance.  If that holds it and, therefore, the DJIA stall at its 144(618), the pullback will probably be to at least the 34(500) midpoint, which probably won't hold because it is below the 144(382).  This leads to a pullback to the 144(214).  

    So, as you see, PhiCube analysis gives us a framework for making hypotheses.  When price affirms them, we know what to expect.  When the hypothesis fails, then PhiCube analysis gives us another hypothesis that very well could be right.  

    The June analysis was bearish because of the assumption of an A = C.  The failure of that hypothesis was recognized early because of the reversal at the 144 (500) midpoint.

    This is part of the power of PhiCube: it "tells" us when we are wrong and action must be taken to avoid catastrophic losses and to preserve capital.  That may sound strange, but think about it:  we are always "right" when we put on a trade, long or short, aren't we? Otherwise we wouldn't have done it!!!  And, yes, PhiCube also does a fantastic job of "telling us" when to put on a trade.