Tag Archives: Elliott Wave Russell 2000

Russell 2000 Intraday Update

The Russell 2000 did not travel to new record highs, but it came close to doing so. The tape also shows a great H&S pattern after which the Russell 2000 started to decline again. My main Plan “A”, (5 waves down in Minor degree) is the top contender at this time.  There is very little action trading the Russell 200o futures so I use line type settings so we can see this part better.

It’s not Elliott Wave rocket science to know what idealized 5 wave patterns are supposed to do, so when it deviates dramatically then we know we have to look for alternatives. Even now I’m looking for a 1-2, 1-2 count still to come, as we already have completed the first set of 1-2 waves.  We are not at wave 1-2 in Minute degree just yet so that would be the second 1-2 wave count, and then two more would show as well.

This would give us a wave 3 extension, but the last 5th wave could also extend, or short just like our present wave 1-2 in Minor degree. We just can’t have all three sets of waves extend at the same time. In this case we already know that the first 1-2 wave is going to be the shortest.  Once the third 1-2 wave has completed, then only sets of 3-4-5 waves will come in. This is exactly how I count the different 3 wave tops in the stock markets. The only difference is that we are in a set of 5 waves in Minor degree but heading south.

The Russell 2000 also has a huge base at the 2009 lows, which the Russell 2000 could head to.  The Russell 2000 would have to fall close to the 750 price level just to get into the price territory of the previous 4th wave of one lesser degree.  Sometimes  markets, even go lower than the previous 4th wave of one lesser degree. Any price retreat to the 550 price level would put the Russell 2000 just below the 2011 lows. Markets are born to disrupt the millionaires who are rich, on paper at this time, because in a bear market the millionaires will start to disappear along with some of these freshly minted billionaires.

It’s not just billions that will be lost when the markets go down, it will be trillions of dollars that will evaporate in a cloud of e-smoke.

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Russell 2000 Daily Chart Review

Is the bull market “choppy enough” for you? We are looking at a 5th wave run, which is one of the main locations that diagonal wave structures seemed to pop out of nowhere.  When we run into a diagonal bullish phase, then it should be a big clue that we are also in a 5th wave. Any location that contains a 5th wave, we can find diagonals.

In the EWP book they are called ending diagonals, and once they are played out the 5th wave will come to an end. In the real world these diagonal 5th waves can and travel at speeds and heights unimaginable, but they happen. They happen more frequently than we think, as they can go vertical as well. From my perspective, diagonal waves give us a big clue, that we are somewhere in a 5th wave.

In this case we have to go back to the 2015 bearish phase, which was a 4th wave correction.

The Russell 2000 is just short of breaking to a new record, but we must see if this gets confirmed next week. I think there is a Fed rate announcement coming up next week, so all hell could break loose in the short term.

It’s a new moon and St Patrick’s day this Saturday, so we will see lots of “green”. That’s better than seeing “red”,  so enjoy your St Patrick’s day because stocks could be changing color this month.

I only used the bottom trend line, and each touching point can be a temporary resting spot in a bigger bearish phase. More and more experts are coming up with bigger bearish forecasts, one which says a 40% correction is on the way.  What happens if this impending correction turns into a 70-80% correction?

When any real bottom comes then the Russell 2000 will be important,  as it shows a much bigger bottom base at the 350-300 price level. It’s not going to go to zero folks, no matter how bearish, the crowd will be at that time.

When we get closer to the start of solar cycle #25 then watch out, as the up cycle of any solar cycle can be an extremely effective “Bear Market Terminator”.

Longer term, I don’t see rates exploding in a fit of madness because when the recession comes, they will be forced to lower rates again.

The 30-day Fed fund rate charts will give us a clue when the fed starts to pause.  If the fed stays “flat” for a year or so, then this is also a potential clue that rates have gone far enough.

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Russell 2000, 2000-2018 Update And The Impending Bear Market

As the world is hypnotized by the biased news coverage of the Nasdaq, DOW and the SP500, not very many wave analysts think the Russell 2000 is important. It’s important because of that big triple bottom base just below the 350 price level. Since 1998 all three bottoms were built on 4th wave bases. This is a huge base which has implications of providing the landing spot for another 4th wave bottom, but in Cycle degree. When the time comes, I’m sure the mass media will try and distract us all, by creating super bearish forecasts in the other indexes that I cover.

The Russell 2000 is not going to go to zero, and the Russell 2000 might be one of the indices that will show its bottom first. Since the 2002 bottom the next  bottom has increased by one degree. After 2032 we could be at a Supercycle degree 4th wave bottom.

Even if the Russell 2000 goes deeper than anticipated, it will not change any big wave count or degree labeling I presently have. Price is not the dominate factor in forecasting, but the pattern is. The Russell 2000 could land at 400, 350 or even reach the 300 price level, but it will not change the sequential degree levels one bit.

All the analysts are forecasting rosy fundamentals in support for higher prices yet to come. Ok, but who are all these bullish forecasters preaching to, which haven’t  heard about this bull market?  They are talking in a building that is full of average Joe investors already which means there is nobody left to come in!  Only the retail sector of investors is jumping in, but historically they always get in at record highs.

The professional contrarians have already, “left the building “, but analysts call this “profit taking”, justifying the continuation of this bull market. They will use any type of  an excuse, and twist everything to justify the reasoning for this market to keep going higher.

All of the 5 major indices that I cover have been in world record price territories, never before seen in financial history. It will not miraculously correct 20% in just a few months, and then carry on with a new leg to the upside, it could still take 2-3 years. From 1929-1932 it took 3 years to play out a SC degree correction, so a Cycle degree correction, will not take a generation or decades to play out.

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Russell 2000, 2000-2017 Cycle Degree Bull Trap Update.

This is the cash Russell 2000 futures contract and just to add a little angle to it, I used linear settings.  At this posting the Russell 200o has a 1550 top, just kissing the top trend line again. Trend lines can be manipulated any way we want, so they can be very subjective if we want them to be.  My wave counts are based on a 5 wave sequence in Cycle degree. Banish any thoughts about extended 5th waves, from the 1975 base, because it’s impossible to have multi generational 5th wave extensions. 5th waves are always fundamentally weaker wave structures, even when they extend. When a 4th wave ends, then stock picking will become very important. 

2007 is my Primary degree wave 3 top, followed by a 3 wave crash, ending in March 2009.  From the 2009 bottom look to your left and you will count 3 bottoms at about the 350 price level. Can the market crash back down to this level again? Sure, it can but will it go that far in the next impending bear market?  

Its the markets job to fool the majority all the time, if they  didn’t,  the majority would be rich!  It’s mathematically impossible for the majority to get rich from the majority group.  

This market can still frustrate us, but sooner or later it will become obvious that the market is heading down. Remember, my bear markets start at the top, under extremely bullish news. On intraday charts I look for the first smallest wave patterns heading down to establish a point I count from.  We can count waves until Little Iceage II, and they will all be wrong if we don’t know where we are counting from.

I talk about the impending bear market at peaks while the majority are infected with stock and Bitcoin fever. Delusional thinking rules in the markets today, so when everybody has made their commitment, who is left to come in?  When the majority of analysts are bullish, who are they talking to, or who are they trying to convince to join the stock party when it’s pointing up?

Maybe the next bear market will stop well short of the 2009 bottom, when it turns and starts to soar one more time. Either way, a potential flat or zigzag in Cycle degree is coming, and I will track it as best as I can when it starts to happen. Bull market tops are the breeding grounds for bear markets.  

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Russell 2000 2016-2017 Record High Review

If we go back into ancient history like early 2016 the markets all bottomed about the same time. The anticipated bullish phase that developed after the 2016 bottom, was another choppy bull market, which are typically found in diagonal 5th waves.  The entire 2017 sideways move was most likely a choppy 4th wave correction that borders on the line of a mini triangle. Trend lines do not work with this 5th wave as they offered no special insight when I did try them. 

The Russell 2000 is also approaching a potential wave 3 in Cycle degree. So far it has taken about 21 months to get to our present highs and should be ready for another correction. 

All the Perma bulls will get hit hard if they try to buy on the dips. When they talk about buying the dips, their brain is still wired into the bull market mentality.  Bull markets end under extreme optimism, they don’t end under extreme pessimism.  Our present Gold/Russell 2000 ratio has increased a bit more since Sept, and is presently at about 1.17:1  This ratio does not move as much as 1.06 is the extreme side of being cheap. 

This entire 5th wave should get completely retraced, and we will see what type of a pattern decline we have by then. At the very least, we need a correction below the August 2017 low. I’m sure the bears will be Hacking and Slashing all the way down, until all the stock bulls are dead! 

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Russell 2000 Mini Daily Chart Review

It looks like this Russell 2000 has peaked a full month ago as it has not been able to break higher since then. If this is supposed to be a 5th wave in intermediate degree, then we have a choppy pattern that pushes all the buttons. Any set of trend lines I can show you, are pretty useless as the bottom trend line will only catch two bottoms.  The best way I can describe this, is that it is a diagonal 5th wave.  Diagonals are connected by zigzags, but one more push to the upside could happen. 

I’m looking for a place to hang a Cycle degree wave 3 and if that is correct then I have the choice of three types of simple corrections. Zigzags, flats or triangles. This corrective stage, which many will call a, “Bear Market or if your a Harry Dent follower,  “The end of the world”. The Russell 2000 will have the last laugh as chances are good it will end on a base of 3 sets of 4th wave bottoms.  Yes, it may still take years before we see what any bear market is going to do, but I’m sure solar cycle #25 will have something to say about it!  The sun cycles are what some people would call a, “Game Changer”, but I like to call them a, “Bear Market Terminators”. 

It may take until 2021 before Cycle degree wave 4 ends, but when it does, we could get what will be yet another 8 year bull market. A 5 year bull market is too short for a Primary degree set of 5 waves, even though one set of Primary degree 5 waves, (1932, 1937) only lasted 5 years. 2021 will give us 89 years from a major bottom to another potential major bottom. I love to use even Fibonacci numbers for large cycles, but we can also get the 10 year cycles thrown in to confuse us. 

In the impending bearish phase in stocks, this entire 5th wave in intermediate degree will get retraced by 100% or more, and even then that would only be an Intermediate degree correction.  The markets will eventually have to dip into the previous 4th wave in Primary degree, which would be closer to the 2009 lows.

Stories of fund flows and insider buying will be key to helping us to see a bottom at that time.  Steven Jon Kaplan is very good at reporting these contrarian indicators. 

When insiders buy as a group, they do not buy on a “whim” and they sure don’t sell based on emotion. They will hold for many years, so no amount of bearish Elliott Wave counts will work.  Getting caught in another huge bear trap, is the name of the game. 

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Russell 2000 E-Mini Wave 5 Review

From the bottom of the Russell 2000 in February of 2016, its pattern of higher lows is clearly visible. The Russell 2000 also ignored any continued bearish moves, but also charged higher producing another new record high. This morning it has made a vertical move which, can be the start of another correction, or the end of something much bigger. 

It is pretty hard to justify this 5th wave as an impulse, even though there may be an expanded pattern involved. So far the Russell 2000 E-Mini has a record high of about 1458 at this time, it can still head higher in the short term. For this market to be on the bearish side, I want to see the Russell 2000 decline well below the 1340 price level, but ultimately the Russell 2000 has to retrace its entire 5th wave bullish phase.  Any previous low during the bullish phase, can act as a temporary support price level.  

If the potential Cycle degree wave 3 is near, then a previous 4th wave in Intermediate degree is an inadequate deep enough of a move. The previous 4th wave of one lesser degree to Cycle degree is a Primary degree correction, not an Intermediate degree correction.

To qualify as a previous 4th wave correction, the Russell 2000 has to fall to a minimum of 850 and lower in the next 3 years or so, or until solar cycle #25 starts cranking up.   

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Russell 2000 Intraday Bullish Phase Update.

The Russell 2000 is still lagging other indices, but the Russell 2000 sure is trying to play catch up. I have changed the degree level up by one degree giving us a potential wave 2 rally in Minor degree. At the 1425 price level we are also sitting at a Head&Shoulder pattern, so we will find out how much resistance we are going to develop. 

In early September we had a correction that includes a great looking expanded flat. Expanded flats do not belong in the group of 3 simple corrective patterns, but it belongs to the complex corrective patterns. Yes, the Russell 2000 can go higher by the end of the day, but it will end up being a do or die situation.  The Russell 2000 is about 30 points away from breaking new record highs, so until that is cleared up, we have very little wiggling room to play with. Mid week, or close to Wednesdays markets do make turnings and other times, they can drag out turnings to the end of the week. 

One ounce of gold can only buy 1.07 units of the Russell 2000, which tells us that the Russell 2000 is very expensive. 

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Russell 2000 Intraday Bull Run Update

The Russell 2000 had a great run since mid August but has now started to correct. A correction may be an understatement as the bigger bearish phase could resume as well.  Any zigzag rally I think I have created great alternation between the A5 and C5 wave.  A5 sure works as a diagonal 5, while the C5 works great as a normal impulse set of 5 waves. Just in case readers don’t know what I call the A5 and C5 waves, those two labels represents the two sets of 5 waves in a basic zigzag. A5 is the leading set of 5 waves while the C5 is the trailing set of 5 waves.  Any B3 wave is the interviewing correction between the two sets of 5 waves. Many times they are flats,  or expanded flats, or any other complex zigzag can also form.  The main idea is that waves always alternate, so to never make it easy for wave analysts.  

If any wave two in Minute degree has completed then there should be no higher highs created, but we should switch back to creating lower lows. The entire wave 2 rally must be completely retraced before we can confirm that this rally was a fake. In a future update I may switch this decline one degree higher, but I’m still undecided at this time. I believe most of the indices I cover will produce a flat which is alternate to wave 2 in SC degree and wave 2 in Cycle degree. Any triangle is not on the radar screen at this time, as it would take far too long to play out, before solar cycle #25 starts. 

 


At this time, my chart issues have been resolved,  but I need to see if it remains problem free for the rest of this week. Not until I deleted all my bookmarks, did it start to work  properly again.  

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Russell 2000 Intraday Rocket Ride Update.

I guess there was more rocket fuel left, giving the extra push higher than anticipated.  This rally is bigger physically,  than all the other counter rallies which gives me the confidence to bump up my degree levels by 1.  If this wave 2 scenario is reasonably accurate, then the 1350 price level will get completely retraced, and then left in the dust, as the next leg down in a bear market revels itself.  If we are close, then this could take until October or late November before we hit another strong bottom.

I’m looking for the initial zigzag in a potential Cycle degree flat where I need two sets of 5 wave runs. They can both be diagonal, but they usually alternate between a simple 5 waves and or a set of complex waves, as long as there is some alternation I will use it in a zigzag. The next leg down does not have to be another zigzag, but a diagonal set of 5 waves would also work. I keep both versions as potential patterns and use them over and over, as the only thing that changes is the degree.

At the last two major bottoms the Russell 2000 is building a huge base that will provide a bottom for the next 200 years or more. The impending Cycle degree 4th wave bottom, will be the third set of 4th wave bottoms with each 4th wave bottom cranking up by one degree level. At major tops each wave 3 must also notch up by one degree level, which makes the 2029 time period a potential SC degree wave 3 top.

Hurricane Harvey is starting to die down, but hurricane Irma is starting to form in the Atlantic. Yes, it seems that hurricanes forming “during” hurricane season,  is  “unprecedented” to the global warming alarmists. Catchwords like “catastrophic” are also constantly used, which is part of the brainwashing tools used by the fear mongers.

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Russell 2000 Intraday Bullish Update


The Russell 2000 decline didn’t last long before it charged right back up, delaying  any bearish move in the short term. There is a good chance that the markets are on a wave 2 rally in Minute degree which means the next decline will be longer and deeper than what we have had so far. Oh, what fun, we get to start with another 1-2 wave set.  We should get another zigzag from wave 2 to wave 3 in Minute degree, which eventually should terminate on the “A” wave in Intermediate degree.

I’m sure this bear market will throw surprises at us, but the Russell 200o has been leading the charge down, giving us an early warning if we choose to use it.

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Russell 2000 Intraday Bullish Phase Review

The Russell 2000 traveled a bit further than I thought, but this is pretty common when we are dealing with diagonal wave structures.  The Russell 2000 is close to my top trend line, that should provide resistance if the bigger bearish phase is still in effect. Technically, we should see another zigzag decline which could hit the bottom trend line in the future.   Some will try and count this as a 5 wave impulse sequence, but each set of waves is about even in physical length, which I don’t allow, or I find very suspicious.

I will keep the 2017 top as a Cycle degree, which can only be confirmed with a longer and much bigger bearish decline. The Russell 2000 and the Midcaps are still leading the way while all the other indices are hovering just off record highs. 

The media loves to report these new record highs, which stands to reason as all the bull markets are at ‘unprecedented’ record highs. I’m still looking for the leading zigzag to a Primary degree ‘A’ wave bottom, but we are still far away from seeing that happen. 

The first thing I think that needs to get completely retraced, is the wild ride after Donald Trump got elected. The 1210 price level should do that.  Ultimately the entire stock mania which started in 2011 from the 600 price level,  should also get retraced.  

For now we need this market to create and new bear market low, and maybe the crowd of bulls will start to wake up that something is amiss in this stock market La La Land. 

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Russell 2000 Intraday Review: Slueth Of Bears Still Leading The Way!

10 Bizarre Names for a Group of Animals «TwistedSifter

The last time the Russell 2000 hit a record historic high was July 27th and it has declined ever since. It would take a bullish phase over a month to see a new record high, and that would only happen if the Russell 2000 was still its main bullish phase.

The big bullish scenario is getting harder and harder to justify as all the other indices would also have to push to new record highs. I jumped to a Minute degree diagonal move, but may have to move back down the degree list if things don’t progress like I think they should. I’m looking for the first parts of an Intermediate degree zigzag, where there usually are a large number of diagonal 5 waves sequences that develop.  

Another zigzag rally seems to be in progress which could be a 4th wave rally. This should be followed by another zigzag decline, for the 5th wave.  The VIX, ignores the Russell 2000, but this is a good thing. The public is being brainwashed by the mainstream media bullish news about the SP500, DJIA and the Nasdaq. Anything that works like a leading indicator is much better than a lagging indicator. Lagging indicators I ignore most of the time, as the crowd of analysts seems to love them. History has clearly shown me that when the fundamentals are ugly, then the markets will head the opposite way. In late 2008 the fundamental news was a complete horror show, yet the markets turned and then soar in the largest bull market since the depression. 

I have a few Gold/Russell 2000 ratios calculated with the July top about 1.15. It would take 1.15 gold ounces just to buy one unit of the Russell 2000. One record high I calculated was about 1.06.

The Russell 2000 was cheap when one ounce of gold could buy 2.63 units of the Russell. We want to get closer to that number at the next Cycle degree 4th wave bottom.

With the late 2002 bottom we are building a huge base of 4th wave bottoms, which would be very bullish in the long run.  Not only do the wave counts have to unfold in a sequence, the sequence of 4th wave bottoms also has to count out correctly. 

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Russell 2000 Intraday Decline Review:

The Midcaps and the Russell 2000 seem to be the leaders in the race to a bottom. So far I can squeeze the decline into an impulse decline, but the decline in the last day or so has a wild choppy pattern to it.  We could still see a move to the upside as a potential wave 2.   Any further move to another new bearish low will confirm that the present counter rally has been just a mini bear market rally. 

One of the most successful hedge-fund pros says we’re ‘nowhere near an overheated’ stock market – MarketWatch

The extreme bullish mood in the stock market is not confirmed by the Russell 2000. The DJIA and SP500 record highs are masking the decline, by keeping everyone focused on how much higher this market is going. For now I can put up the Cycle degree wave 3 top, and only time during the next few years will confirm it.  

Since 2000 we have or will have 3 sets of 3-4-5 waves completed and each one is separated by a move one degree higher. In the next one hundred years or more, at least 3 more sets of 3-4-5 waves will get filled. Our present Cycle degree wave 3, then a Supercycle degree wave 3 (2029), and one more at a Grand Supercycle degree wave 3, which could be closer to 2129. 

The biggest wave 3 of any importance is a Submillennium degree wave 3 is out further still which may happen closer to 2229.

Of course I will be pushing daisies by then, so another crop of younger wave analysis would have to work on it to confirm it.  

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Mini Russell 2000 Intraday Record High Review

The last record high with the Russell 2000 was on July, 26, 2017. The Russell 2000 managed to top out at 1452, and since then has produced a very convincing decline. Of course the markets job is to fool as many wave analysts as it can for as long as it can, so we have to keep vigilant if some unexpected 3 wave pattern starts to develop. So far the Russell 2000 has been working like a leading indicator, along with others.

The record breaking new highs in the DJIA and SP500 have been masking the Russell 2000 decline, keeping investors in the dark about what is happening. Breaking from the pack happens on a regular basis, but sometimes we don’t know which index may lead the way. 

I wouldn’t want to see any counter rally come back much higher than the 1430 price level, so until the major peak holds, everything is still possible.

I always start any wave count with the smallest degree set from the list in the EWP book. That way we can work up the degree stack and avoid accidents like slipping into too high of a degree, too early. There is a run of Submicro degree and now we are one degree higher at Micro degree. 

Constant reviewing will force wave degree changes along the way. In the long run I’m looking for the Cycle degree wave 3 top which the majority of  long time readers knows all about. 

As I post, the Russell 2000 has not rallied as much as others have, which is a good thing. We just completed the full moon this Monday which the Russell 2000 seems to be ignoring. The next big setup will be on August, 21, 2017 when a new moon and an eclipse all happen on the same day! 

Some analysts just love to bring out the “boogie man”  or what I like to call a “Mythical Dragon”. They constantly bombard us with fear, so they can keep us brainwash. The so called GSC or SC degree “depression”, is one of these mythical dragons that has never been sighted since 1932.  😉 

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Russell 2000 Intraday Record High Reversal Update

Finally the Russell 2000 pushed to a record high and then instantly started to decline. This is the type of a pattern I like to see from a top when it shows some conviction. Any 5 wave decline, depending on where it forms, points us in the direction of a new trend. 

Soon my Cycle degree wave 3 may find a permanent home. That may sound silly to the majority, but my blog is dedicated to tracking all 5 waves in Cycle degree, because without all 5 waves in Cycle degree, tracked and confirmed,  no SC or GSC degree can exist. 

The only way that any SC degree or GSC degree can exist is when we count from a 4th wave base and not a wave 2 base. 

I use the EWP as one huge impulse where all wave 3s extend. 5th waves rarely extend except in the last degree before the top. 5th waves are always the weakest as well. I think it is next to impossible to have multi generational 5th wave extensions. 

I have to look into it in  more detail to see how far any Cycle degree 4th wave can take us. There is a huge base between 350 and 400 which would give us the third previous 4th wave of “one lesser degree”. 

As nice as the Russell 200 decline started, we have to be aware that it can still backfire at any time. With diagonals you want to look for potential surprise moves before they happen, which is easier said than done.  

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Russell 2000 2015-2017 Daily Chart Review

The Russell 2000 has given us one wild ride which most analysts ignore most of the time. Recently the Russell 2000 has led in the downhill race, but quickly turned and played catch up, soaring to new record highs again. What is different with this top is that the pattern is very choppy, followed by another very choppy run, which sure can count out as an ending diagonal. 

The 4th wave in Intermediate degree sure can work as a zigzag which was then followed by what looks like a set of 5 bullish waves. Well, these can also work as one single zigzag, with a stretched “C” wave in Minor degree.  This has been pretty normal on most indices, except for the Nasdaq, which has been closer to an impulse pattern, than all the other major stock markets. 

The Russell 2000 also has several major bottoms that could provide us with an early warning wave count, for a future Cycle degree 4th wave bottom.  No! We are not some super duper mega crazy SC or even GSC degree wave top as those wave counts are all based on 5th wave extensions, and not wave 3 extensions. Wave 3 extensions come from a wave 2 base which I started to switch to in 2013. 

There is no way of knowing for sure,  if this top will hold.  The prospect of an ending diagonal sure can change things in a hurry. 

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Russell 2000 Intraday Top Review

 

Basing any wave count on just one index can give us many false starts. I like to scan a few other indices, as some can take the lead on a directional move. In this case the Russell 2000 saw its last high back in April, 26, 2017.  For this Russell 2000 to catch up to the other indices, it would still have to  soar to new highs. That would also mean that the other indexes still have a long way to go up as well.

We do have a fairly good start to an impulse, so this rally can run out of steam as well. Then the other big three indexes sure would follow and we would be on track to the start of another strong correction or the end of a big bullish phase, that had one of its beginnings back in early 2009.  This I consider as “one” move with 5 waves in Intermediate degree.  Since it is a 5th wave, the entire move was a diagonal 5th wave. Sooner or later any big bearish move will become obvious to the majority and they will be thinking about getting out. When the media is all in a panic and selling as fast as they can, then this market will perform a miracle and start a huge rally.  Why?,  because the markets  will do the opposite of what the majority thinks it will.

It will still take some time before we can see this about to happen, but remember that markets can’t go to zero as the Russell 2000 is developing a huge base  down at the 300-400 price level.  Since 2000 all the bottoms have worked as 4th wave bottoms, as all of our tops work as wave 3 tops.

At his stage of the game Cycle degree wave 3 could have finished but as usual, it still may take time before it will hold. There is no way that I can remain bullish as chasing the last little upside, is a fools game. No smart, experienced contrarian investor or trader,  will jump on this bandwagon, but the majority love to buy high, so who is going to deny the crowd instant gratification.   A herd of investors,  act just like a herd of bulls or buffalo and they convince themselves that, “This time it’s Different”. Of course they sniff each others asses which sends them in a trance,  breathing methane destroying all hope for any critical and logical thinking.

Markets work on emotions, as the fundamentals are lagging indicators not a leading indicator.   All our hindsight opinion should always be turned to use as foresight, because that is what the EWP is supposed to do with good use of idealized charts.

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2000-2017 Russell 2000 Primary And Intermediate Degree Review

 

 

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.

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Russell 2000 Daily Chart Review

 

 

Since early 2016, the Russell 2000 has also soared. To call this a true impulse, you would be forcing a wave count that is not there. Every basic rule of an impulse has been broken, which only leaves us with a diagonal 5th wave. This makes for a potential high degree top completed, after which this Russell 2000 can join the bearish ride down.   Starting into an impulse count will not work, as diagonals seemed to be the main flavor this month.  

Since we may be heading down to another, “A” wave, I see no reason for the diagonals to suddenly go away, or turn into pretty impulse waves.  Making impulse waves does not help us in clearing up the problem of giving us a location. Still, this Russell 2000 needs to show us much more downside,  just to get past a point where it no longer threatens a major push to the upside. 

The danger of some wild bullish move still to come is reduced once we calculate the Gold/Russell ratio.  This ratio now sits at 1.05, which means that you will need 1.05 ounces of gold to buy one unit of the Russell 2000.  This is now the record as the most expensive calculation I have taken. This is not a good number and insane to base a long term bullish position on. Yet the speculators or “dumb money” have their largest bullish positions. This is a recipe for a disaster to happen. 

All we need is the media to jump on some fundamental reasoning and the rest will become history. In fact, there is a trade war going on where Korean companies are being kicked out of China, with tourist being advised not to book into Korea. Many companies no longer will set up manufacturing in China as the risk is increasing dramatically. 

Only time will tell what fundamentals the mainstream media will promote, but I’m sure they will come up with something to captivate their readers. 

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Russell 2000 Intraday Bear Market Review

 

It has been awhile since I looked at the Russell 2000 but it sure looks like it’s finally over on the bearish side. These are some wild patterns that just barely fit into diagonal waves, as the “B” wave portion traveled to the limit, just short of breaking out again.  If this is still true, then eventually the Russell 2000 has to dip below the 1330 price level. This is when the inverted flat will be confirmed as being a bearish rally.   This should lead us to a potential wave 3 in Minute degree  and then waves 4 and 5 will still need to develop. 

That will be a tall order, but diagonals can produce some real wild moves, where we can scratch our heads until there is no hair left, trying to figure out where we are.  Sure, we can call all the moves as impulse waves, so it is real simple, but the markets give us simple waves to fool us. Waves are never what they look like for the majority, because if they were, then all wave analysts would be billionaires.  

With the potential of Cycle degree wave III being completed, we are looking for a Cycle degree correction from our choices of three types.   A triangle is far back at the bottom of the list as there is no time for it to develop in the next 2-3 years. I like the flat as my favorite at this time, but we may get the first move as a zigzag. 

Unless the markets have some real fast down days, any “A” wave in Intermediate degree is still a long way off.  Overall the markets could lose two thirds before we see any type of a real bottom.  Most wave analysts will be expecting the markets to go much lower, but I’m sure these markets will fool us all and not travel to new record lows.  Besides that,  the Russell 2000 is building a major base at the 2009 lows, which will act like a leading indicator when it happens. 

I don’t see any depression, even at the bottom of Cycle degree wave 4, as there is just too much currency floating around. Sure, when the experts call it that a we are in a recession, then that recession will be over and a huge bull market will develop. Just like the majority wave analysts missed the last two big bottoms, I’m sure they will miss the next one as well.  Ignoring all market sentiment in favor of drawing a bunch of useless numbers and letters is not my idea of an effective wave count, as the contrarians in the world do a much better job of buying low and selling high.

Every contrarian indicator that the real contrarians use, should be incorporated into the EWP.  Over the years I have talked about all these indicators regularly.  

At  present the Gold/Russell 2000 ratio is sitting at 1.09, which means it takes 1.09 ounces of gold to buy one unit of the Russell 2000. This is breaking all expensive records of the Russell 2000.  Until that ratio starts to get bigger, or spread no bull market can sustain itself, except for big bearish rallies.  

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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.

 

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