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:
- 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.
- Subsequent upward movement started out choppy, overlapping and corrective, and appears to be carving out an expanded flat for intermediate wave 2 (black).
- Minor wave C (blue) of the expanded flat appears to be in its final stages, needing only the completion of minuette (green) wave 5.
- The duration of intermediate wave 2 (black) would be 1.382 times the duration of wave 1 (black) on June 13.
- The Hurst 37.6-day cycle topping window spans from June 10 through June 18. June 13 is the center date of that window.
- 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).
- 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.
- 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.
- Advisor bullishness is at record high levels. Higher than at the 2007 peak.
- 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.
- 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.
- 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.