Russell 2000 (RUT) (EOD)


#1

I do love the Russell 2000 for its outstanding cyclicality. Just posted an update on twitter and I thought I would add it here for fellow Hurstonians…


#2

Hi Dave,

I agree but can’t prove it. The Russell is a flatter index which means it is not driven by a handful of companies. This equates to better cyclicality, IMHO. Do you use the Russell to help phase other indices where there may be uncertainty?

Curt


#3

Hi Curt,

Yes it is my goto index at the monent for clarity. It is a superb example!

Dave


#4

Hi guys,

I have a slightly different take. In the course materials Hurst makes the profound statement that, but for amplitude modulation, all stock charts would look virtually identical. If one understands the underlying mathematics, it is very easy to see why that is true and is easily demonstrated.

From a spectral viewpoint, all the major U.S. indices are the same. What differentiates them visually ( resulting in differing ST analyses) is simply the variation in amplitude modulation. I use the same filter settings (which compensate for a lot of the modulation) on the Russell, Dow, Nasdaq, and the S&P 500.

William


#5

Hi William,

We are probably saying the same thing. I agree that the spectrum is virtually identical for every major U.S. stock index. However, I believe Dave’s point was that at times some indices provide a clearer picture of that actual spectral signature when using the visual method and ST. The Russell 2000 is a good example because of its construction. IMHO, using the Russell 2000 is similar to preprocessing data for cap-weighted large stock indices like the S&P or DJIA before analyzing them visually and in ST. Using the spectral approach as you do avoids the need for this cross-verification altogether. Fortunately, most of the time none of this matters because the major U.S. stock indices are generally moving in lockstep with similar amplitude modulation.

Curt


#6

Hi Curt,

Excellent point!


#7

Yes, exactly as Curt says. I use the clearest example to my Hurstonian eye in each sector to guide my phasings in those instruments with less than favourable AM.

Dave