 Hello, traders at CMC Markets. Welcome to a new update from RRG Research for Monday, the 30th of May and I'm recording it on Friday morning, the 27th. My name is Julius de Campanar and I'm presenting to you from Amsterdam in the Netherlands. I'm running RRG Research together with Trevor Neal and we usually take turns every Friday recording this video but Trevor is currently traveling, Trevor is traveling, teaching technical analysis in Nigeria, I believe he is these weeks. So you got to stick with me for now. Let's start with our usual update and a look at how world markets, world indexes have rotated and in front of you is the RRG, the relative rotation graph showing the rotation of a number of major stock market indexes and it's relative to the MSCI world index which is the center of the chart. Overall, markets are sort of outperforming the MSCI world, that's when they're moving to the top right and on the right hand side of the graph and last week I already pointed out that it's primarily the US markets that are on a negative heading and we're talking about the NASDAQ, we're talking about the Russell growth index, the Russell index, we're talking about the S&P and to a lesser degree the Dow Jones industrials. This is the longer-term picture as it stands right now and that did not change very much. The good stuff is in Europe, you see that the stocks is really picking up, DAX has just crossed over into the leading quadrant and we got the UK far to the right actually being one of the strongest markets or the strongest market in this setup, in this universe. If we dive into the daily RRG then we see kind of a different picture. We see that the stuff that's on the right hand side that was predominantly on the right hand side on the weekly RRG has now turned around, this is on a daily basis so this is what happened since we spoke last and you can see that these Europe, DAX, the UK, the Nikkei which was also pretty good on the weekly RRG have now turned around and there doesn't mean that they're immediately bad but they're losing relative momentum so they're going through some sort of a setback and the one that really stands out is the Russell index, the RTY, the Russell 2000 index, that's going against the tide here on the daily but if we switch quickly back to the weekly you can see that the Russell growth is actually rotating back towards the lagging quarter. That's actually one of the weakest rotations that we can see so we have a situation here where the long-term picture for Russell is pretty negative and a long-term picture for all these is pretty positive but they're now moving counter-trend so that is the big framework in which we are working so stock markets around the world predominantly outperforming the US and the US as I said last week dragging the market down and now Russell, the Russell 2000 index stands out. We take that to individual charts then if we quickly look at the S&P 500 so where is the bounce coming from? I believe that we're now resting at an important support level for the S&P 500 well this is intermediate support the important support level is around 3500 I would say. However if you look at the daily then you can see that there is a big of a bounce going on. We tested 3900 few weeks of the candles that just dropped below that level if you look at the RSI the shorter term RSI you see a nice positive divergence building up that means that the downtrend that we currently see in the S&P 500 is taking a break taking a pause we don't know whether this might be a big turnaround maybe we've seen the low but we're trend following so we don't know yet so we got to take it as it comes to us and for the time being when I put this in the bigger framework I think that we're looking at a recovery within the longer term downtrend and that speaks when we look at this daily chart you can see that there is a bit of support being built around 3900 however there's quite some resistance here around 4050 that's the low that we saw here in May June last year and then there is this old support level that is around the 4100 level previous lows you know you can make these support and resistance levels if you use a thicker line then it probably got more touch points but you can see that it is like 4130 if I bring it up here it's 4160 that's the kind of range that we're talking about that's overhead resistance and with the market coming down I would say that I'm going to expect renewed supply when the market hits that level when it gets there so for me we're still looking at a recovery within a longer term downtrend now let's bring that to the to the Russell index to the RTY then we can see that that has actually dropped a lot further than the S&P 500 it's actually testing former peaks that were set in 2018 and 2020 and they're now expected to start acting as support and it looks as if they're really doing that however the the relative trend is rolling down that's what you see on the on the weekly RRG where it's inside the improving quadrant and rolling back down to lagging that's what you see here so the big question is how strong that bounce is going to be in the in the Russell 2000 whether that's a tradeable bounce or not if we do look at the the daily then you can see that we have a small higher low being put into place which is a good thing and we're now challenging resistance from the peak that was set on May 17 May 17 and May 18 we take that out then all of a sudden upside unlocks to levels above 1900 it's about a hundred point upside potential with once we've taken out that high limited downside because that will be short-term support again this is all happening in a longer term downtrend and I think you'll agree that when you look at this that this is not we don't call this an uptrend so to wrap this all up US markets still weak against the rest of the world rest of the world still beating the US for the short term pattern has flipped we see some improvement in US growth stocks we'll also if you would look at the RRG for sectors that's what you would see there if we concentrate on the Russell 2000 you can see that there is a little bit of upside there same with the S&P 500 but it's all taking place within the framework of a longer term downtrend we quickly look at the the US growth the RRG momentum plus basket that we have with CMC markets and you can see that this basket is actually doing pretty well it's outperforming the RTY by a mile and that's because it's heavily weighted towards the energy stocks the energy sector which is doing really really well so this is how with RRG we're able to pick out stocks that are actually outperforming or relatively easily outperforming the market now which ones are worth looking at in my view obviously FCX Freeport McMorrin which is inside the improving quadrant and starting to move towards leading is this really a move that is worth looking at we're going to look at the individual chart and then if you look at the cluster of charts here on the right hand side the roll in relative up transfers the Russell 2000 the ones that I really want to when I focus on is CTRA that's Cotera energy and the reason is because it is actually rotating back up and we do know when a stock or a security moves from leading into weakening and then runs back up towards leading without hitting lagging that is a strong rotation so CTRA is the second one that I want to look at and then these two look nice they got nice tails that are a nice RRG heading so that's Halliburton and continental resources and I've picked Halliburton it could have been CLR I think Halliburton has a little bit more potential and we're going to look at that in a minute so start with CTRA when you see that this is actually breaking to new highs and it's following the trend maybe we've already had a little bit of a run here but when CTRA drops back to that support level you probably will get some nice entry opportunities with limited downside risk and good upside potential if you look at Halliburton you see that this one still needs to move to the to the to the form of peak we're taking out some intermediate resistance levels that is good offers opportunities all the way up to 42 and obviously the big kicker comes when 42 can be taken out and then FCX which is that is actually quite interesting stock because it is on the far left of the RRG it's inside the improvement quadrant traveling at a nice heading that's what we see here and you can see the RRG lines with the green RS momentum line pushing above 100 and the RS ratio line being dragged higher so we are there's still a very good possibility that Freeport McMorrin will make the turn and join the rest of that group into the leading quadrant but there's one thing that I'm worried about with Freeport McMorrin and that's the development of this what's called rising wedge and that's a negative pattern so when we work our way higher and this pattern evaporates without a major signal then the relative trend remains however when Freeport McMorrin drops out of this wedge pattern in a couple of days if that's going to happen I can't look into the future then we have a very negative signal for Freeport McMorrin and we can see a rotation from improving back down to lagging which would be very negative so that's three stocks inside that Russell 3000 index that I think are worth looking at and they're all three inside the CMC RRG momentum plus basket I'm going to wrap it up for this week and I hope to see you again next week same time same place