Elliott Wave Analysis of the TF Futures Contract – Russell 2000 – RUT – by Sid from ElliottWavePredictions.com

TF 360m 6-9-14

Elliott Wave Analysis of the TF Futures Contract – Russell 2000 – RUT – by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.

Evidence is mounting for strong (wave 3) downward movement in the Russell 2000 to commence shortly:

  1. There were 5 waves down from the March 3 high (in the RUT cash index) to the April 15 low.  The 5 waves took the form of a leading expanding diagonal.  Diagonals are typically deeply retraced.
  2. Subsequent upward movement started out choppy, overlapping and corrective, and appears to be carving out an expanded flat for intermediate wave 2 (black).
  3. Minor wave C (blue) of the expanded flat appears to be in its final stages, needing only the completion of minuette (green) wave 5.
  4. The duration of intermediate wave 2 (black) would be 1.382 times the duration of wave 1 (black) on June 13.
  5. The Hurst 37.6-day cycle topping window spans from June 10 through June 18.  June 13 is the center date of that window.
  6. Wave C (blue) within wave 2 (black) would equal wave A (blue) at 1182.5, which is right in-between the .786 and .764 Fibonacci retracement levels of wave 1 (black).
  7. Minute wave 5 (pink) within wave C (blue) would equal the net traveled by Minute waves 1 through 3 (pink) at that same level:  1182.5.
  8. The P/E ratio in the Russell 2000 is a whopping 84.39 according to WSJ.com. One year ago it was half of that.
  9. Advisor bullishness is at record high levels.  Higher than at the 2007 peak.
  10. In recent months, record levels of margin debt has been utilized to push stocks to all-time highs. Margin debt has also eclipsed 2007 highs.
  11. Hurst cycle analysis is projecting no further new highs after the 6/10-6/18 window, and expects substantial downward movement into a large cluster of cycle troughs due in late November.
  12. If the Fed was really able to backstop any kind of substantial market correction, all of the crashes of over 35% since 1913 would not have occurred. (1916-17, 1919-21, 1929-32, 1937-42, 1968-70, 1973-74, 1987, 2000-02, and 2007-09.