Explanation

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Analysis of Russell 2000 index gives insight in the Small Cap and Technology sectors of the US market. It results in signal(s) that is(are) usually effective over relatively longer term of weeks or months rather than of days.

When RUTTR signal is 'Sell', it is recommended to avoid being long in Small Cap or Technology sector of US. When RUTTR is 'Buy', it is recommended to be long in Small Cap or Technology sector of US. Price Oscillattor and RSI Stoch act as confirmation signals to RUTTR. Falling RSI Stoch and falling Price Oscillator indicates that the direction of the market is down (and vice-versa). Overbought % and Oversold % indicates how far off the mean Russell 2000 has gone. A very high value indicates that the regression to mean is expected. This regression to mean should once again be coupled with rising//falling values of RSI Stoch and Price Oscillators. As always, it is essential to look for multiple confirming signals and trade accordingly.

The Direction/Divergence Analysis gives the direction over days for the Price and various indicators. The divergence between the Price and Indicators is a likely indication of what might be coming for the Price. The last column gives a measure of the Divergence.

Measure of divergence is given in the column 'Price vs Indicator Divergence Score'. This socre is over 3/5/8/11/13 days. For an Up/Down divergence per period, the score is 1, similarly for a Down/Up divergence the score is -1. Max score can be +5 and min score can be -5. RSI Stoch divergence is quite reliable and values of 5 and -5 are very significant. Value of -5 is likely to indicate an imminent fall of Russell 2000 and value 5 is likely to indicate an imminent rise of Russell 2000. The Smooth CMO (fast) values are leading and fast. The Price Oscillator values are lagging and slow.

The recommended investment vehicles are ETFs like IWN, IWO, IWM and QQQ and Funds like ProFunds - UAPIX, SLPIX, SGPIX, SVPIX, OTPIX, UOPIX, SHPIX, SOPIX, USPIX and RydexFunds - RYMKX, RYVYX, RYAIX, RYVNX.

Since trading can cause tax consequence, it is recommended to trade in a tax-free and/or tax deferred account (in consultation with your tax/investment advisor).

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Credits: Bela, Milind, Sidney, Werner, Ed.