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RUT: I don’t usually follow the Russell 2000 Smallcap but a couple of notes I’ve seen this week commenting on the ‘tremendously strong moves taking place in RUT’ caused me to run off and have a look.
I’m very glad I did so because I think the RUT is sending very important and powerful messages.
I first looked at the long term chart from 2007. Same shape as the Dow but with important overlap at point B. I’ve taken the same approach as the Dow assuming we’ve only had waves ‘big A and big B’ with wave C upwards to come.
When I assume wave C is going to be 0.618 of A I get various targets and numbers, the main one being a target of 2135 for point C.
The thing is (and what’s rather disturbing) is that the recent rise from the low plots at almost exactly 0.382 towards 2135. And the correction plots at almost exactly 0.236.
Given the five shape upwards and the almost exact prints on the appropriate Fibs brings me to the conclusion that RUT is already in wave C upwards, has completed waves 1 and 2, and that the very strong performance now taking place is the start of wave 3. If so, this sends very important messages about how one should be interpreting the Dow and S&P.
RUT long term chart…
And for a more detailed analysis of the short term, here’s another RUT chart.
The chart clearly shows a clean five wave upwards move for wave 1 that stopped almost exactly on the ‘perfect 0.382 Fib. Then wave 2 downwards formed a perfect abc that stopped again almost exactly on the 0.236 Fib.
Now RUT appears to be shooting upwards with strength in the first part of wave 3.
Naturally I cannot be sure that wave 3 has begun, but the show of tremendous strength is highly indicative of a third wave performance.
I have shown on the chart approximate target boxes for waves i and ii of wave 3.
Strong moves likely again today in RUT Cash.
My strategy here is to wait for confirmation that waves i and ii of 3 have formed and completed, then look to climb aboard the long side in the 1600 area.
Very interesting charts hatman
I have applied the handbrake to my Dow short
via a Dow long until I can give more thought.I may wait and see if the 2007 model is right
which caps the ‘h’ below 28000, imho.Never give up, never surrender.
RUT doesn’t have a futures market so it’s impossible to get a prediction for todays action except by interpolating from the Dow and SPX futures. Also, from what I’ve read, there is ‘panic’ rotation into RUT. Thus the shape of RUTs rise might be stronger than the larger indices.
I’m tempted to go long for the medium term. But I’m going to resist that temptation.
The reason is that the 1600 area represents a strong line of support/resistance and will likely be a pause point for some sort of wave iv or 4.
In classic technical analysis fashion, it RUT then breaks upwards through the line of support to hit my 1660 target, it should then fall to test that line from above (for wave ii of 3). That will then be the most opportune moment for long positions to be taken.
Here’s the chart again showing clearly the line of resistance in the 1600 area. I suspect 1600 or so will get hit today or tomorrow to end the current STD sequence.
RUT: I’ve looked at the ten day chart. It’s all a bit scrappy but does at least show the tremendous rise over the last few days. Because of the strength I’ve calculated a suggested wave 3 at 1611 being 2.618*1. This is interesting because it’s in line with the band of strong resistance in the 1600 area.
So I think we get a rise to 1611 or so for wave 3, a pause for wave 4 then another jump upwards to the 1660 area for wave 5. Given the strength it wouldn’t surprise me to see wave 4 a some sort of flatline sideways move. The Dow and SPX of course can correct lower (and probably will).
Given the STD sequence I imagine RUT will try for the 1611 by close of play Friday.
Dow S1H from wednesday did not bother, or seem to not bother,
with pt1a … could be just a sign of great strength.Futures point to pt2 may not have printed yet and may do
so with spill up today.Then we have pt3 for S2L and we get the situation where
the ‘h’ of wednesday meets the ‘l’ of thursday with a
single STD pt in between.ECB news at lunchtime will doubtless provide the sharp
action and who knows what Dow futures and then cash
will do ! … seatbelts on !Never give up, never surrender.
Atm my trading will be just to dial out my Dow long and
short for the best possible outcome. Only then will I
think about bigger picture patterns.ECB today and FMOC next wednesday should give me the
sharp swings to play out my hedged Dow positions.Central Bank weeks were always likely to be fun even
without another round of trade war hot air !Never give up, never surrender.
I think we’re going to see a few days of “up” now,with most of the action happening in the futures market.rth hours will be a digestion of that..i hope im wrong.monday is an interesting looking turn date for me now.youve got to fancy a new ath now.3080’s seems likely
Hmmm… for some reason I had Sept 30 in mind for FOMC. But now I see you are correct for Sept 18.
ECB and FOMC are both widely signalled outcomes – whilst there is bound to be short covering ‘just in case’ I wonder if it will be a case of ‘better to travel’ at least in the short term.
Today and for the next four days we have the Chuseok public holidays in Korea (basically harvest festival).
In my travels around the world I’ve seen (and eaten) a few strange things. For a British person though, one of the strangest things is the popularity of SPAM here in Korea. Yes – SPAM.
Introduced by the American soldiers in the Korean war, spam became recognised as a staple food in Korea and a ‘life saver’. It still is, and a gift of spam is seen as something special. At the moment the supermarkets and department stores are full of ‘premium gift boxes’ of spam which people buy as gifts to relatives and friends to celebrate Chuseok. On Friday, Chuseok Day, there will be countless millions of tins of spam consumed in Korea as a ‘special food’ to commemorate the Harvest as well as the role spam had in saving the Koreans from starvation during and after the Korean War.
Our local HomePlus Market (Tesco) is currently awash with premium presentation packs of spam and almost every customer can been seen carrying two or three of these home as ‘special gifts’.
As a British person (actually I prefer to call myself English) and a Monty Python fan, you can imagine that I find this devotion to spam quite an extraordinary thing….
As I read your post I was thinking Monty Python .. ha ha ha.
Happy days.
Never give up, never surrender.
Since the early hours and with the grounding offered by
the euroland cash market. I have a better trade mix.After many trades in and out I have two identical longs
and two identical shorts on the Dow. With 100pt gap
between them. Only problem is the shorts are lower
than the longs ! Still I am happy with my first
attempt at dialing them out. Roll on ECB news.Never give up, never surrender.
I agree that the Dow futures may be all action
but cash will be a lot less lively.Based on my Dow model for 2007 once the move
started there were no big pullbacks until
the market topped out.Dow cash 27650 is my price but if we see
the 28000 then the idea falls apart.Bears may be better served by waiting and
go short on the drop (whenever) rather
than trying to short the top (wherever).Never give up, never surrender.
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