CHARTING THE RUSELL 2000 IWM

Here is stats on Google trends for search words: "Bank Run". The words are being searched at an all time pace; this might be insight into actual investor concerns not yet reflected in risk investments such as stocks.

IWM is ETF for Russell 2000.

The chart is showing an EVE-EVE double top; this is two rounded top patterns. The previous year, June was a good month, beginning at the Bullish DOJI marked June 2011.

Today the weekly chart has a Bullish Harami pattern. The question is will June repeat 2011? In my previous post, I indicated we might do better to compare now with the last bear year-presidential election year 2008 and not the previous bull year 2011.

Drilling down further using volume by price-clearly most investors over the last 30 days are in the Russell at $79, thus UNDERWATER. Depending on how the news cycle goes the next few days; this VWAP could prove to be too much resistance for bulls to overcome. Or, with a few carefully placed news releases, this could fire up the algos to push stocks up to a lower high, sames as June 2011.

The put/call ratio shows no nervous bulls as of yet, even though the VWAP shows they are mostly underwater.

The blue line represents the p/c ratio, the red line is the price of IWM. IWM doesn't bottom, until the blue line, p/c ratio, gets above 4.0. As you can see, even though bulls are under water and May was a bad month for them, the put call ratio barely budged-showing complete complacency.

Conclusion:

The p/c ratio and $79 VWAP seem to suggest IWM has further down to go before EW1 can be reached.

If we are using 2008 as a road map, then we can expect to reach the 1st leg bottom sometime late June or early July.

Coordinated Central Bank news would change the technical dynamics in the short run.

Tim Kathlina