It is finally spring here in northeast Ohio, and everything is green. Growth popping up everywhere. Green shoots galore! It is a magical time of year when flowers appear from no where overnight. It just makes everyone happier, especially after the long grey winters here.
But harken back for a moment if you will to another time of green shoots. It was about this time of year 9 years ago when the term was applied to the the stock market and broad economy. The stock market had just bottomed in March and EVERYONE was scared to death that the world was going to end. Fed Chairman Ben Bernanke used the term to describe the nascent signs of recovery. It caught on and there were green shoots everywhere.
Although the economy is not in crisis today there are plenty of other perceived crises in the world. And with that the stock market has not crashed but languished sideways for nearly 4 months. It seems like a good time to point out a green shoot amongst this chaos.
The chart above shows the Russell 2000 ETF, $IWM, since the beginning of the year. We see the bearish Bat harmonic with a 61.8% retracement through to the end of March. The 200 day SMA playing a prominent role in support. This completed the sequence of pattern and reversal. A bounce higher to a lower higher and a Shooting Star reversal April 18th started a new regime. And the shallow pullback to a higher low started to give hope. Tuesday, the IWM closed at a higher high.
This is the first sign of a short term uptrend. A green shoot. As I write in the pre-market it continues to move higher. A Measured Move would give a target to near 163, which would be a new all-time high. Of course there is resistance along the way at the prior top, but that price level is within sight as well. Things may be starting to look up. Green shoots.
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