The Russell 2000 Index (RUT) rallied 0.6% on Tuesday to close the day at 705.27. RUT recorded its second successive 'very large'* five-day gain on Tuesday. A five-day move of 5.8% and 8.4% on Monday and Tuesday, respectively. RUT crossed above its 50-day moving average on Monday, but is still currently trading below its 100 and 200-day averages.
*Five-day percentage gain is more than two standard deviations stronger than the average five-day percentage change measured over the last 30 trading days.
Q: How has RUT performed in the past, omitting repeat occurrences within 10 trading days, when, while trading below its 200-day moving average, it had recorded a 'very large' five-day gain on back-to-back trading days.
A: According to the 18 previous occurrences of this event, EventEdge indicates that RUT has shown a strong bullish edge that peaks 19 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Tuesday, March 25, 2008) is Monday, April 21, 2008.
RUT rallies in 100% of the cases (18 of 18) by an average of 5.9% relative to the close on the event date. Which, based on the close of RUT on the event date (705.27), provides a target price of 746.88.
If you would like to see more details of this historical edge, go to www.markethistory.com
To see this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
