[Chart Of The Week] The Most Important Chart For Stock Market Bulls

JC Parets
July 30, 2016

One of the things that I take most pride in is my ability to keep an open mind and consider every outcome. This goes for all markets, not just stocks. But today I have a solid if/then scenario that I think every U.S. stock market bull should be watching. If this particular index is above certain levels, not only do I see no reason to be bearish, but I think having above average long exposure is warranted.

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[hide_from visible_to="member"]Here we are looking at the Russell 3000 Index which represents approximately 98% of the investable U.S. equities market. Throughout the second half of July, prices of this key index have consolidated in a tight, sideways range, slightly above the former all-time highs from May last year. If we're above last year's highs in the Russell 3000, we want to be aggressively bullish towards U.S. Stocks:

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Russell 3000 Index

From a price target perspective, we want to take the amplitude of this entire consolidation over the past year and remember that the bigger the base, the higher in space. 1395 represents the 161.8% extension of the 2015-2016 consolidation. If we're above last year's highs, this upside target remains in place.

If you're a U.S. stock market bull, this is one to keep a close eye on.

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