Russell 2000 Monthly Chart, 2000-2017 Cycle Degree Review



I always look back to look at the flow of the charts, and that they still fit together sequentially from a Cycle degree perspective.  Either I review the big picture pre-emptivly, or the markets will do it for us.  The markets have no problem in shredding the best wave counts on a continuous basis, and they will keep doing this over and over. 

I have counted everything in GSC degree and then down one degree in SC. None of them made sense until I systematically drop down one more degree and looked at all the markets from a Cycle degree perspective. The EWP does not teach us how to find the correct degree, as it only promotes GSC or SC degree wave counts. 

All GSC degree wave counts have failed since the 2000 peak. When everyone tries to count 5 waves down in Primary degree, and they fail. Then this a clear signal something major is wrong with our wave counts. From the 2007 peak of a Primary degree wave 3 top, the markets crashed in a very straight down type of a move. 

Rarely are these types of moves impulse waves, at it did not take hindsight to figure that out. Five waves down into March 2009 was a forced wave count as they also forced and bent the trendlines to make their case. The 2009 bottom now is a good place to find a real wave position because it would technically then last for all time.  If the 2008 crash was an Impulse then chances would have been very good that the markets would never have c=harged to extreme highs like it did. The 2007-2009 crash was a flat type of a move, and is one of the reasons why the all the markets broke the 2007 one more time. 

In other words the 2009 bottom has been just a correction in an ongoing bull market, which the markets, then added 8 years of bliss for stock investors. Ok, that’s a bit of an exaggeration as the Flash crash around 2010 keeps those bullish stock investors fearful.

The 2009-2017 bull market was about as choppy as waves in the ocean in a stiff winter squall.  This has fooled every major wave analysts for years as the markets refused to die on the cues of a bunch of numbers and letters.  Around 2013 I switched and focused  on diagonal waves, as the markets seemed to be full of them. Diagonal waves are waves that are all connected zigzags, which can have flats in many of the “B” waves as well.

As long as all the wave analysts count three wave patterns as 5 then we are basically brainwashed at the expense of ignore 3 wave structure.  3 Wave structures are far more important to see than 5 waves as anybody can see an easy set of 5 waves.  Counting everything as an impulse is wrong and will never help us in determining where we might be.

In stocks the Primary wave three starting way back in the 60’s is the extended wave structure not some Cycle degree 5th wave.  Deleting or killing the  early Cycle degree was my first step which pushes the Cycle degree wave three, to a new position in March 2017. 

Every top or bottom, we need to have our idealized wave counts ready, to know what we should expect for a correction. In this case a Cycle degree wave 4 correction.  We must have a 3 wave bear market to confirm it all, not the 5 waves down that the majority have tried for the last 17 years. 

Yes, I put up the Cycle degree wave 3 at this time, but hopefully we are not too early. 

How deep can a Cycle degree wave 4 decline go? All the way back down if it wants to, but I’m sure a “B” wave counter rally will get in the way and spoil the bearish party, at least in the short term.  If we get a flat or a zigzag is still uncertain at this time, but I like the idea of a flat very much. Any Cycle degree triangle is last on the list, as we may not have the time to complete a triangle by the time solar cycle #25 starts.  Besides the Russell 2000 can’t fall to zero like they tried to tell us in early 2009.  Even the DJIA wave one bottom in 2009 would have sent the DOW to zero and that sure was not going to happen from my perspective. 

One thing is certain, and that is if the Russell 2000 hits a bottom at 450 or 350 is irrelevant. What will matter, is the pattern, it will make getting there. 

When this happens in the next 3-4 years, the majority will be fretting how much lower it will go, and they will be ill prepared to take advantage of the impending massive bull market that is sure to follow.