Russell 2000 (Canary in Coal Mine) Projects Imminent, Multi-Month Peak!
07/22/23 – “Stock indexes are fulfilling upside objectives – in price and time – with the Russell 2000 being an index that is adhering closely to these levels and ushering in the time for a potential 1 – 2 month (or longer) peak…The coming week’s Fed meeting (and Basel III Endgame meeting) could impact many financial markets…
Stock Indices remain positive with expanding divergence among stocks and between indexes. This divergence refers more to the extent of their 2023 rallies, and the levels at which they now sit, as opposed to differing times for highs. No index displays that more – and reinforces the disparity spread across equities – than the Russell 2000.
That index was one of the first to peak in Nov ’21 (even as others spiked higher into late-Dec/early-Jan ’22 before peaking), adhering closely to major range-trading objectives and fulfilling what had been forecast for a multi-year wave ‘5’ (‘V’) top.
It was also one of the first to bottom – in June ’22 – after retracing ~50% of its 2020/21 gains and bottoming right where it had previously peaked (resistance turned into support) in late-2018 AND early-2020 (when it was also one of the first to peak… in both instances).
It rebounded (~50% of its decline) into Aug ’22 and set a 6 – 12 month peak. Since that time, it has ‘swung’ back and forth within that range of ~1650 to ~2050 (basis nearest futures contract) – reinforcing a textbook example of range-trading movement. The latest phase was the projected rally from March ’23 – with an upside target of ~2000/QR (futures).
That upside target was linked to many indicators, including its overall wave structure… and was just tested. One of the most notable aspects (even more evident in some pandemic ‘darlings’ that have since crashed – like CVNA, ZM and even ARKK) was its distinction as ‘4th wave of lesser degree’ resistance. In a 5-wave decline, that represents the high of the second (wave 4) rebound before the final decline. A subsequent bounce will often retest that level.
Though those stocks, and the Russell 2000, are not always indicative of the broad market, they are often like the proverbial ‘canary in a coal mine’ – helping to pinpoint when a significant extreme or turning point is being reached. That coincides with a 20-month low-high-(high; July ’23) Cycle Progression in a few of the often-leading indexes.
The bottom line is the Russell 2000 has reached its upside target and the upper extreme of a ~12-month trading range and is preparing to head back toward the other (lower) extreme of that range. Weekly cycles would still allow for a final spike high.”
Stock indexes remain in bullish but divergent 3 – 6 month cycles & trends and on track for multi-month peaks in the second half of July ‘23. As it did in Nov ’21, the Russell 2000 is increasing signs of an impending multi-month peak but is still expected to extend its rally into late-July ’23 – when a decisive peak is most likely.
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Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.