RUT, Russell 2000 update

rut june 11 2013

See also our previous blogs. A month (almost) ago we suggested that this one could peak at about 1050. It has reached 1008 and we wonder if this is it. It is the big “are we there yet?” question. This is a near perfect expanding diagonal triangle 3-3-3-3-3 structure which ONLY occurs as a 5th wave, that is at the end of the ride. They invariable break down to the base and do so rather rapidly. By the way, legs 1. 3 and 5 correspond quite nicely with Fed. action. 1 in anticipation of the Y2K problems that never materialized, 2 in response to the market lows of the tech wreck of 2003, and 3 in response to the “great recession”.

P.S For those that would argue that wave 5 is disproportionately large relative to the entire 5 wave sequence for the larger degree wave 5, we point out that wave 3 goes from 100 to 500, a factor of 5x . Wave 5 goes from 300 to 1000 a factor of 3x so wave 5 is much smaller than 3. It is roughly 60%. A semi-log chart (see previous blogs) would show this better.