One of the things I learned a long time ago was never to predict a price and a time for a market turn. It’s OK to look for a target in either one but looking for both is asking for ridicule. Sorry, Gann Square enthusiasts. Although, I admit to not knowing more about Gann than what it is.

While I am on record with saying “there is one more leg left in this bull” and “it should end a few months from now,” I never said “how high” other than “not much more into a new high ground.” Today, I’ll offer up a price target for one index. You can say it implies “before Labor Day” and I would not argue.

The Russell 2000 index of small stock took over the mantle of leadership in January when the market choked on short vol trade. The S&P 500 pulled back about 11% for the first real decline since the election.

Now, while the big indices (I hated writing “indexes” when I worked for the man) still flounder below their old highs, the FANGdaq and small caps are indeed in all-time high ground. Everyone has already beaten the FANG analysis to death so let’s look at the Russell.

The chart shows the trend channel from January 2016, when this leg of the bull market began. I’m allowing 2018 to be part of the bull trend for the simple reason that that trend remains intact.

The red lines represent a triangle pattern for this year based on daily highs and low. The green lines are the same but drawn more conservatively through daily closes. On this weekly chart, the difference seems negligible but it’s not.

Why not? If you use a simple projection technique, you get an upside target for the breakout at 1740 for the closes and 1780 for the bars.

As you can see, the top of the trend channel already hit the lower target so let’s say that the upper target is the one to watch. And if we assume, which we should not, that the current rally pace will stay the same, then the index hits the upper target sometime this summer. That gives us a little leeway for slope changes, especially when the market likes to freak out over trade.

RSI should (there’s that assumption thing, again) reach overbought conditions by then, as well.

If you are chart doubter then chew on this. The yield curve. It’s damned flat right now. Not “recession is here” inverted but pretty flat nonetheless less. Zero hedge just ran a piece saying the forward yield curve is indeed already inverted.

To me, it’s one of those things that matters only when everyone else gets on board saying it does not. I think we are close to that.

There you have it. When the FANGs finally give up the ghost, things will get dicey. But since everyone knows that (so they think), they will arb it away by selling them early. That will leave the Russell all by its lonely self and when it finally tuckers out, well, there you go.