Does the Rally Have Legs? One Chart to See

Lede

Does the recent rally have legs? It’s a fair question and one chart (not the only chart) can guide traders.

Story

While the S&P 500 and NASDAQ 100 have soared to new highs, driven by the seven mega caps, the Russell 2000 (small cap index) has not.

We can track the Russell 2000 with the ETF ticker IWM.

In order for a full blown bull market to exist outside of seven companies, there must be breadth - code word for “more than just those companies.”

Here is a single chart from Pattern Finder of the Russell 2000 (IWM) with all of our algorithms turned on. You will see a wall of resistance that the index has failed to breach six times in a row:

So, you want to see if the market rally is real or just a Santa Clause mirage? Check out the breadth - and you can do so with the Russell 2000 small cap index.

Trade Options and Want Specific Trade Set-ups?

Leveraging recurrent trends has consistently yielded robust outcomes.

That is, look at a current stock, see what it did in the past when it had this current set-up, and then move forward.

That’s all that backtesting is: Stock ABC is here, in the last 3-years when it was here in the next 30-days (or whatever) it did this.

Adding a filter for our proprietary AI increases win rates and average returns over both one- and five-year periods.

These results on this strategy span far more than the mega caps, and we discuss and share that research in TradeMachine, going back over a decade.

To learn more about TradeMachine®, our backtesting software, you go here:

TradeMachine - The Who, What, Why, and How

TradeMachine allows for large scale customization on the one-hand, along with easy to use and nearly immediate results on the other.

Thanks for reading.

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