Tag Archives: Russell 2000

Russell 2000 5th Wave Bull Market Review

It always pays to look at charts from a different perspective, especially going back to any major low. Back in 2009 the 4th wave in Primary degree died and a new 5th wave was born. The majority of wave analysts were extremely bearish at that time as they all saw wave 1 in Primary degree heading up to a wave 2 in Primary degree.  But an amazing thing happened, the markets ignored all the bear market rally cries and kept right on pushing higher. Even by 2011 bearish wave counts flooded the internet.

Smart money already knew that the bear market was over in late 2008, as commodities had already bottomed and insiders had been buying for months already. Stock market insiders don’t buy on a whim nor do they sell on whim, so when we do read about general insider buying reports, then we know that a sustained bullish phase is coming.

The majority of investors always miss these great opportunities, because they don’t expect them to happen and usally they are wiped out and have no stomach to buy low. They only love the markets when it is high and going higher.

They are also never prepared for when the bull market comes to an end. So far, the Russell 2000 has continued to push to new extremes, but it did so with a very choppy pattern.   We can abuse any trend lines, but 5th waves can be infested with diagonal wave structures, so we want to be careful as diagonals also forecast the endings of trends.

If there was an expanded pattern involved, then I think this 5th wave would be far more violent than what has happen. An ending diagonal, in a diagonal 5th wave, now there is a wild combination indeed. This last diagoanl 5th wave in Intermediate degree is impressive all the same.

This Ruessll 2000 is going to a Cycle degree wave 3 peak, but as usual it can frusturate us to no end when it keeps pushing higher. Every trend will fail, but trying to figure out when, is a crap shoot at best. Nobody is ready for a Cycle degree bear market in stocks, as the majority are always late to any party.

You will constantly hear about analysts looking for a “correction” bottom! This is a big clue they have no idea how big of a dip we’re going to get. It’s an analysts job to look at the risks as investors seem to ignore them and just keep buying into world record peaks. One of the worst bear markets in history only took three years to play out and I don’t expect the next one to take much longer.  Solar cycle #25 is going to kill any remaining stock bears,  just like solar cycle #24 killed the stock bears in 2009!

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Russell 2000 Intraday Record High Review

The Russell 2000 has pushed to new record highs by a large margine which leaves little doubt that the bullish phase as extended with the Russell 2000.  The DJIA and the SP500 have a long way to go to catch the Russell 2000. I think it is the Dow and the SP500 that are lagging behind and may never catch-up. I don’t believe in this catch-up market theory as the DOW and the SP500 are more like leading contrarian indicators. Still, investors are not confinced that a big bear market is coming.

I’m sure the Russell 2000 companies all require commodities of some type which could cause unintended consequences.  The only way that investors may wake up to the big bear is if we see an unxpected decline breaking past 3 or 4 price support levels.  Once the Russell 2000 breaks below the February 2018 low, then investors and analysts may start to join the bearish retoric.

During the 2008 market crash every major asset class joined the stock decline, with gold, silver and oil joining the bear party as well.  How long this can keep going is always uncertain, but all trends must end sooner or later.

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Russell 2000 New Record High Review.

This is the June contract daily chart and it is the main reason why it does not fill out. I started with the weekly chart and it seems the entire 5th wave in Intermediate degree is a diagonal with this part being a zigzag traveling to new record highs.  Apple is just completing the exact same type of zigzag which tends to be the finish of a diagonal 5 wave run.

I did check it again from the 2015 bottom, which is best done with the weekly chart. Many may  start counting this as potential new leg up, but if that is the case then another two, 1-2 wave structures would have to form.  The VIX is also apporaching record lows again so a big bullish move in the Russell 2000 is highly unlikely this time.

When a market goes vertical, it’s always a good time for a correction, or it can mean the end of a big bullish phase.

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Russell 2000 Daily Chart: Cycle Degree Review

In the big stock markets, contracts run every three months and not monthly as many other contracts do.  This is the unminipulated daily chart which only shows more when I use weekly chart settings. If I switched to line type, then it also changes the wave pattern dramatically. I created a big expanded count, which is pushing it,  because it should still clear the secondary peak, but not travel to new record highs. This is starting to look like a triple top setup which normally makes it a real challenge to figure what peak still belongs to the bullish phase, or the bearish phase.  We have a very narrow window for this count to get trashed as a true diagonal “C” wave seems to be unfolding.  The fast drop of the top is also a sign of an “A” wave decline, but then the following “C” wave should show more subdivisions. This would produce a very long “C” wave in Intermediate degree, but it would also land on the “B” wave in Primary degree that we need, to correct a Cycle degree wave 3 top.

Yes, it could still take a long time before this clears up, but that is the nature of the beast that we have to deal with. At a minimum the Russell 2000 should still fall to the 950 price level, which could also supply price support for a short period of time. All those that recommend in buying on the “dips” have no clue as to the size of the correction,  that a Cycle degree wave 3 peak can produce.

Bear markets come in 2-3 different flavors,  with single crashes that do not produce a bear market, like 1987 and even 2008. Then there are the bear markets that produce a crash (1929) followed by a bullish phase, but then the “C” wave can be a long drawn out bear market, like we had from 1930 to 1932.

I’m sure we will see a “C” wave bearish decline yet, but it would also be a signal that the end will be near. I try to be very clear on what the market have to do to stay in the rules, as this helps in finding out if we are wrong at the earliest stages of the game. The last thing I want is to drag around a bad wave count for 30 or more years.  A Cycle degree correction must subdivide down to 3 degree levels of Primary, Intermediate and Minor degree levels to get confirmed. With intraday charts we would run into Minute degree waves as well, but on weekly charts they may not show up very well at all.

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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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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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Russell 2000 Bull Market Review:2000-2017

 

 

The Russell 2000 has also displayed some wild moves, since the first major top back in 2000.  The Russell 2000 has also formed a major base which started back in 1998. 

This gives us an extremely bearish base to work with between the 300-350 price levels.  Can it go lower? Sure, it can but that would not force me to make a degree change.  2000, 2007, 2017,  all finished with a progressively higher degree wave 3 position. 

At present we should end with another wave 3 peak, but in Cycle degree, Not a wave 5 in Cycle degree, or anything higher.  It is critical to stay in sequence, in what is supposed to come next, based on well drawn out idealized scripts. 

Without any of the Cycle degree positions, all the SC and GSC degree wave counts in the world will not mean a thing.  Just one single degree higher than Cycle degree wave 3,  is Supercycle degree wave (III), but this “ONE” degree could still take more than a decade to ever see the light of day, yet one very popular site has been in SC degree wave 3 since 2009! 

The mess of waves, starting from the 2009 bottom, is nothing but a diagonal wave structure, and if it was a big bearish rally, then from 2009-2017 would have been far more choppy and disorganized. The 2015 bear market 4th wave, must eventually terminate at a 5th wave peak, and as we can see the last little 5th wave in Intermediate degree is also a diagonal sequence. 

I follow what is the idealized sequential pattern, not what the wave patterns may look like at any given time. If I see that the herd of wave analysts all have bearish wave counts along with the majority of  market participants, then I know their wave counts will never work.  We are coming up to the end of the month in 8 days, so this could be another great time for a turning.   

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Russell 2000 Daily Chart Update

 

 

The Russell 2000 has ignored much of the hype, and is still going its own path. This seems to be heading down, which could make the Russell 2000 a leading indicator index.  If we listen to those that try and give us a support price level, ask yourself, “Support for what”?  The majority of support price forecasts will never hold if we are heading into a big bear market. 

Any Cycle degree bear market can retrace by 61% and then that changes if you use the gross or the net number.  One thing is certain, if the big bear is to show its face, no puny little 20% retracement, will do the trick. At a minimum, we should see the entire start of the 2016 bull market get completely retraced. (950) Even after that price level gets hit we may need more just to get to a potential “A” wave.  This may come at the 750-700 price level, which is a net 61% retracement of the entire bull market.   

It sure is not going to happen in one day as this could take several years still to play out. 

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Russell 2000 Intraday Review And The Trump Bump Commentary!

 

 

We are witnessing the unprecedented bullish mood towards the general stock markets and the Russell 2000 is no exception.  Many times, the Russell 2000 will not play nice with its friends, but which I like to see as  the Russell could already be sticking it to the bulls, while everybody is being brainwashed by the Wall Street talking heads. 

We are also in a very high diagonal wave pattern type market and I don’t expect that to change for some time.

I look at a dozen financial blogs in the mornings and on most days.  The first story about insider selling has surfaced, but I’m sure there were many more that I have not looked for at this time. The right news will be in the  dozen blogs I save in my tabs. I don’t waste my time in hunting news  The more stories that come out about insider selling, the higher the intensity.  This action precedes most major declines in stocks.  

In short, insiders don’t buy this Trump hype, while all the retail buyers are trapped.  Insiders are contrarians, yet we seldom hear about them in the news.  

In the long run this all helps to confirm that a potential bear market is still to come, but as usual we need to be more certain as the pattern can still spike like crazy. 

So far I look at this decline as a potential wave 1 bottom and the counter rally, is just about as choppy as we can get.  The VIX has also crashed to a new record low, making it the second lowest price point in the last two years.

It was only about 5 cents, but the new record low is now $10.93. Remember that the VIX Commercial traders are also extremely net long, so this all helps to start putting a major top to these markets again.  

Last week’s report showed that the Commercial traders added 6671 long contracts, which is about as bullish with the VIX as we can get.  On the flip side, this is all very bearish for the general stock markets. 

 

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Russell 2000 Intraday Review

 

 

The Russell 2000 can work as a leading indicator, so it is a good index to watch. The SP500 and the DJIA are still getting the hype, but the Russell 2000 saw its last peak well over 5 days ago. So far this decline fits the diagonal wave structures the best, but exactly where we are staring out, will have to be adjusted later on.

What we just finished could be the 4th wave, so we have to be prepared to adjust wave counts when the need arises.

I always start off with a best guess low degree level, as that helps to avoid slipping into a higher degree before it’s time to do so. Short term I cannot be more bearish, as we could drift into a 4 year bear market, that could make moves so wild that we don’t know what the heck is going on.   The big question is what type of a pattern, would the markets have to give us, if a Cycle degree wave 3 top has been completed?  These are the questions that we must have an answer for at “every” turning,  not just this one. The good knowledge of how to draw all the simple core patterns, and knowing how they fit together, I consider as being the key.  When the expected wave pattern does not materialize, then we know that an instant review must take place. Most of the time wave analysts just make  cosmetic adjustments and then carry on, or they have so many indicators going that they hide all the waves, and therefore always be right. 

This is unacceptable if we want to add value to our  wave counting abilities. Missing a major bull market or a major bear market with wave counting is not an option, when the contrarians can do a much better job of picking tops and bottoms without any knowledge of the EWP.  

The EWP book tells us that we can have 3 simple corrective patterns at any turning, and I will keep two patterns going until one of them is eliminated. Any Cycle degree triangle is very low on this list, as it would take too long to play out before any anticipated 2021 bottom.  Also, we want the bearish mood to play out before or just after solar cycle #25 starts.  Solar cycle #25 will kill, destroy, terminate, all bearish opinions as the upswing of solar cycles can produce 5-8 year bull markets. 

 

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Russell 2000 Intrday Review: Has The Stock Mania Ended?

 

 

Bull markets can be long and boring, but sure can change in a hurry when it’s time to do so.   The Russell 2000 has seemed to top out on December the 11th, two days before yesterdays full moon. The markets charged right through two moon cycles, and the one cycle that should be very bullish now shows that it can be bearish as well. 

Just goes to show that we can’t trust the moon cycles to give us any special insight, but we know that moon cycles can be triggers for wild trend changes, but what we can’t trust in which direction the new trend can go. 

What we do see is the start of a nasty decline, that once again should never be counted as impulse waves, so they must start off as diagonal waves. Of course that also can work as a triangle, so we have to be aware that this move can still back fire.  The DJIA charged back up again today, but the Russell 2000 has lagged behind.  This helps in using the Russell 2000 as a leading indicator. 

If we are over the hump so to speak, then this should continue and even slice through my bottom trend line. 

Provided there are no more hidden waves that can come out and surprise us then this trend should continue heading south into a rough and wild pattern. 

The Cycle degree wave III may now have a location where it can be happy, but at this time it is still a fantasy, until we have a better chance of confirming it. 

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Russell 2000 Stock Mania Review

 

 

There must be a shortage of stocks, if we believe that markets run on fundamentals, as this so called  “Great Rotation” kicks in. The “Great Rotation” is just another name for “New Era”, which we have heard about many times before, usually just before a market crash. Is it any different this time? The only thing that is different is “Time”, but when human emotions are involved, it’s never any different.  

I reworked the 2015 top to reflect the 2015 bear market as a better fitting single zigzag. This was then followed by a bull market that now has defied logic and gravity. I can work the 2016 bull market as a set of diagonal waves, but we may just be at the third zigzag.  As long as there is that possibility, I have to run the wave count to see if it holds up. 

Trends always come to an end, but exactly when they turn, is always a big mystery.  That wild November/December rally is one long skinny leg, which leaves no base to build on, as the market  seems to be walking on stilts. If this diagonal 5th wave is not completed, then another crash could happen followed by another wild move up. The bottom trend line might hold with the next move, but even if it crashes through that bottom line, the markets could come back hard, and soar one last time. 

The Russell 2000 would have to drop well past 1280 to eliminate this last hurrah, of a 5 year “Stock Mania” bull market. 

This could drag on and on, but anything can set this herd into a panic.  I watch a lot of westerns, and all it takes is a bunch of shots fired into the air, and the cowboys can stampede the entire herd!  What news story, will be like that shot fired into the air? 

Some have calculated the last 10 years of corporate earnings and they say the market is more expensive now than in 1929, 2000 and 2007, so this can sure help make a bearish case.  Mortgage rates are soaring as well, which adds to the bearish case. 

 

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Russell 2000, 2007-2016 Cycle Degree Review

 

 

rjz16-dec-2-2016

 

A few are starting to question this rally, and it always happens when prices start to head down. It becomes easier to find bearish stories as prices start to tumble, but later on it will seem like they opened the bearish floodgates.  Right now bearish stories are hard to find, but when the bearish stage is ready to reverse, then the Internet will be flooded with bearish news, and the stock bulls will not be found! 

How deep this can all go is never perfectly clear, but in the long run, we could see 60% or more of a decline.The markets have gone vertical since the election, which is a great indicator that I look for, just before major turnings. This is also the time that the wave counts can be very clear, so we have a very short window to review the entire bull market, and try and figure out what we had.  I call it a diagonal 5th wave in Primary degree, which contains 5 waves in Intermediate degree. 

The best thing about two of these indexes is that they have a clear base, that is going to be hard to break, when all the bears are out in full force. If the markets do crash down to extreme levels, and some idiot has another wave one of Primary degree, then this will never work. 

Of course the majority will miss out in another great bull market, as they will not be prepared for a major turning.   This will not happen overnight, as it could take until 2021 for all this to play out.  From 1929 to 1932 it only took three years for a SC degree correction, but I would be surprised if it only took three years this time.  They believe that degree levels have a set time to play out is a myth. Sure we can count Fibonacci years, and this run is about 84 years old. I would rather get closer to the 89th year, but be finished the bear market a bit after solar cycle #25 starts.  Betting against the solar cycle at that time, will be a fools bet as solar cycles are extreme fundamentals that the mainstream will always ignore.  

 

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