From the 4 or 5 market indexes I have posted wave positions on, this Russell 2000 can work as an early warning system for any future bottom. All the wave counting in the world is useless if we don’t understand the idealized sequence. From any Cycle degree perspective, it is imperative that I find all Intermediate and Primary degree turnings. Without them, Cycle degree has no base to sit on, which would make any Cycle degree position very unstable.
The expert wave counters have tried several times in starting a major bearish wave count, but yet all of them failed dramatically. One obvious reason that they failed is that all the bearish wave counts they had, would have the Russell 2000 go below zero. Between the 300-350 price range this Russell 2000 has established a major base, in the last 20 years. Markets can and do crash which usually sends them back down, to a previous 4th wave of one lesser degree.
Sometimes they even travel past these 4th wave bottoms, but in the case of the Russell 2000, 2009 saw a very small higher low than the 2002 bottom.
Yet in 2009 all the expert wave counters had major bearish wave counts, in complete sympathy with the majority who were running from stocks as fast as their little legs will carry them. They all ignored the insider buying sprees, and had a zigzag crash counted as 5 waves down. In 2009 all the major wave experts had a very bearish wave 1 position in Primary degree. The 2007-2009 decline was far too steep for an impulse, but they forced the wave counts anyway.
From the 2009 bottom we had one wild and crazy bullish phase, which destroyed most impulse wave counts. This forces all the wave analysts to use, the “WXY” waves. Using “WXY” waves is the analyst basically telling us that we have, “No Clue” where we are!
In late 2008 Steven Jon Kaplan was calling for the biggest bull market since 1932 yet all the wave analysts were very bearish. There was a serious contradiction here, but he ended up being right. From this 2009 bottom the bull market was extremely choppy with some wild and crazy moves. Once you abandon any impulse wave counting, but switch to diagonal wave counting, then it becomes a diagonal 5th wave in Primary degree. In 2013 I switched to diagonal wave counting, and found out that diagonal waves are far more frequent than we think, and that they can develop in 3 major places.
If the 2009-2017 rally was some big bearish rally, then we would have had far more violent and choppy waves. Bear market rallies don’t last 8 years, so this also makes it fit better into a diagonal 5th wave.
Since 1997 all 4th wave bottoms never produced any depression, yet the super bears have been calling for one, for over 20 years. It would not surprise me, if the next major bottom in the Russell 2000, stops well short of the 2009 bottom. It could then start another 8 year bull market, during the solar cycle #25 ascension. The majority of wave followers will be waiting for that big one, while all the insiders are buying and the contrarian indicators are about as bullish as we can imagine.
The EWP principle has turned into a short term trade setup tool, which gives us no room to build big positions. Most of the wealthiest people in the world are contrarians, and you don’t see Warren Buffet or George Soros count a bunch of waves before they decide to take any position.
Yes, many of the intraday moves are hard to read in foresight, but they all eventually have to fit into any Intermediate and even Minor degree levels. It can be extremely difficult to think the opposite of the thundering herd, which will not happen overnight. It took my friend at least 5 years of hard work and research to switch to contrarian thinking, and any EWP he knows came from me talking about it. All wave analysts should incorporate all the best contrarian indicators so we never miss another big bull market again. If we treat all failed wave counts like an accident investigation, I’m sure wave analysts can crank out more confident turnings.