Q4 2019 Breakout… Now What?

In what we believe has been a cyclical bear phase since January of 2018, we have remained defensive for the better part of the past 12-18 months. However, lo & behold it now looks like we are breaking out to new highs in the last few weeks, which may position RTM to take a more  aggressive stance in the market. The question is what should investors expect if this breakout proves to be real?

If the market is indeed at the beginnings of another bull leg in the rally there are (3) important things to pay attention to:  

1. 1. Pull backs should be shallow.  
      1. Pull backs are normal (but if we are indeed breaking out) they should be shallow and market indices should be held around mid-single digits (3-6%) The smaller the better.  
   2. Volumes should be lower & the markets should avoid distribution.  
      1. Be vigilant, the first sign of trouble will be the market showing a big increase in volume on a selling day. 
      2. Should distributions hit the tape, the market should find support quickly and be met with accumulation.  
   3. Keying in on Small Caps
      1. If the Russell 2000 can breakout of its consolidation and start to lead the indices it will be a significant sign for an appetite for risk assets into the beginning of 2020.

Rest assured we’re on top of the situation and we’ll keep you informed. As always, we welcome questions so don’t hesitate to contact us.