Cannot Continue!

Chart through the courtesy of tradingsim

Back in 2016, we saw the Russell make new lows, while the Dow held up. Today we are seeing the Dow attempt to break through its Jan 2018 as the Russell heads South. This divergence won’t continue for long. But, the question is which index has nailed the next direction?

The chart below shows the four indices:

1. The Dow is at the Jan 2018 highs.
2. The S&P has broken out, retested and presently holding above the retest high.
3. The NASDAQ is well above the Jan 2018 highs and is in a 5-d sideways mode.
4. The Russell has generated an 18-day Upthrust Change in Trend pattern. The minimum target is the 13-w line turn. This week the line turn price is 1602.65.

So, a quick answer to the question above is:

We are likely to see the divergence continue (or Dow turn down) until the Russell touches the 13-w line change price – this week, 1602.65.

Let’s see what happens after that.

What if the Russel turns around without getting to 1602.65?

I have drawn in the resistance line for the Russell and support lines for each of the other indices in the same chart above:

1.  For the NASDAQ, acceptance below 7585 (basis nearest futures month) would generate a 5-day Upthrust Change In Trend Pattern.
2. For the Dow and S&P, acceptance below support indicates an 18-day swing correction

On the upside, acceptance above current swing highs for the three will suggest the upmove I am looking for has begun. For the Russell, I’d want to see acceptance above 1711.80 to say the down move is over.

Let’s see what happens in the coming days.