Stock Market: Russell 2K Reaches Major (6 – 12 Month) Target at 1710/QR.
05/18/22 Weekly Re-Lay Alert – “Over the past two years, since the March ’20 meltdown in stocks, equities have moved with a little more divergence than what preceded that time frame. That became more pronounced following early-May ’21 – the time when an initial (divergent) peak was forecast for many stocks, fulfilling the then-latest phases of both the 8-Month & 16-Month Cycles.
The subsequent 6 months (180 degrees) heightened that divergence with hundreds of stocks remaining below their May/June ’21 highs – right up to the present time – while many others managed to generate new highs. At a majority of the key turning points, specific indexes would often (subtly) identify themselves as the leaders – sometimes for just a couple weeks – while others followed behind.
Leading into early-Nov ’21, the Russell 2000 & DJTA were positioning themselves as leaders – projecting final spike highs that would fulfill wave ‘5’ upside targets and usher in 3 – 6 or 6 – 12-month peaks. Proxy stocks like NFLX concurred, forecasting a final spike high.
Both of them fulfilled those expectations and signaled major tops (the chart on this page is from Nov ‘21 frame when the Russell 2000 was fulfilling multiple upside targets – the synergy is always the most important factor – and completing a ~19-month advance precisely at those target levels). Soon after, the NQ-100 fulfilled its forecast for a wave ‘5’ peak – in mid-Nov ’21 – and began its own 6 – 12 month corrective period.
The third phase of this topping process was projected to take hold in early-Jan ’22 – when the 8-Month Cycle would re-emerge as many related cycles (including larger ones like the 2-Year Cycle) signaled the same thing – all warning of a much sharper decline.
In roller-coaster analogy terms, it was more like the third ‘car’ of a three-car coaster (where each of those cars has several rows of seats, or sectors of stocks, instead of just one or two) finally reaching the summit.
That ushered in the time when all the cars could begin steeper descents, in sync with all those cycles. Those declines were forecast to be the most significant since the March ’20 meltdown. The DJIA & S+P 500 managed to spike to new all-time highs in early-Jan ‘22, and fulfill the 8-Month & 2-Year Cycle objectives, while most other indexes set lower highs.
Similar divergence was seen within sectors, like techs with AAPL setting new highs while MSFT just missed. (Others, like FB & AMZN, had already set their peaks in mid-2021 – reinforcing this topping process in individual sectors as well as throughout the entire market.)
More recently, it was the DJIA identifying itself as the ‘canary in the coal mine’ (or something similar) – when it was the sole index that was forecasting a multi-month spike high on April 19 – 21 after most other indexes had already generated weekly trend sell signals in late-March ’22. The DJIA was the index to watch – a type of ‘leader’ even though it could also be argued it was the real laggard – in anticipation of another ‘abrupt sell-off’.
It peaked on April 21, when the latest plunge began. As the month of April ’22 was drawing to a close, the Russell 2000 re-took that mantle and identified a crucial level to watch – both as an intermediate downside target AND the first level at which the latest intermediate low could take hold. It recently reached that downside target and is vacillating just above it…
Stock Indices are all determining whether they have put in a multi-week low (May 12) or just another 3 – 5 day low on the way to progressively lower levels.
As multiple indexes were reaching their monthly support levels and critical range-trading targets, the Russell 2000 was doing the same – dropping to 1710/ QRM on May 12 – fulfilling its latest range-trading target while completing a 50% retracement of the entire 2020/2021 advance.
Reinforcing its range significance, the area around ~1710/QRM was also the level of BOTH the late-2018 and early-2020 peaks – the two most significant tops prior to 2022. That is a decisive level of resistance-turned-into-support AND the ideal level near which a 1 – 2 month (minimum) bottom should take hold.
The April 27 WR Alert & May ’22 INSIIDE Track highlighted that key downside target, which also had the latest decline equaling the prior (Jan/Feb ’22) decline – a textbook ‘c = a’ wave scenario:
4-27-22 – “This is validated by the action, and the ranges, of the Russell 2000 Index. As illustrated in Nov & Dec ’21, the Russell 2K fulfilled major cycles and upside price targets in early-Nov ’21 – identifying that as at least a 3 – 6 month peak. It topped in perfect sync with an uncanny series of 750.0/QR & 375.0/QR trading ranges.
After its initial sell-off into late-Jan ’21, the Russell 2K also started swinging in approximate 190.0-point ranges – the mid-point of the 375.0/QR ranges (which is the midpoint of the 750/QR ranges)…
Since then, it has whipped back and forth between support near 1895 and resistance near 2100/QR and has spiked below 1895/QRM with this unfolding ‘abrupt sell-off in late-April’… A weekly close below 1895/QR (ideally below 1881/QRM, since that is the late-Feb low) would signal a break of support and likely spur a quick drop to ~1710/QR…”
4-29-22 – “The Russell 2K just generated a weekly close 1895/QR – signaling a break of support that could spur a quick drop to ~1710/QR. The NQ-100 has related range targets near 11,000/NQ with pivotal wave support near 12,000/NQ.”
As a result, that is the level – and the index – being monitored most closely at this juncture. It would take a weekly close below 1710/QRM to signal a break below that support. Conversely, a weekly close above 1710/ QRM would signal an initial holding of support.
The DJIA & S+P 500, similar to the Russell, have also attacked the levels where their latest declines will equal the magnitude of their Jan/Feb ’22 declines. If lows are set near these levels, it would represent a set of textbook ‘c = a’ wave relationships (Jan/Feb ’22 decline = ‘a’ wave decline, Feb/Mar ’22 rebounds = ‘b’ wave bounce, Mar – May ’22 declines = ‘c’ waves down).
There is another ‘cycle’ or pattern which is being repeated with current action.
In a majority of months since May ’21, stock indexes have set multi-week peaks in the opening days of each month and then seen 1 – 2 week declines. In many of those instances, subsequent lows were set around the 19/20th of the month (May 19, June 18, July 19, Aug 19, Sept 20, Dec 20).
It would not be surprising to see some stocks and indexes hold their May 12 lows (on an intraday or daily close basis… or both) while others diverge and spike lower into May 19/20 – fulfilling this ~30-degree cycle. In either case, the weekly close – and the pivotal level of 1710/QRM – is the primary focus for the coming days.
Looking out over the next two weeks, the monthly close will also be a revealing factor. The primary indexes have declined enough to fulfill the criteria for a 3 – 6 month sell-off but not yet elevated that. Their monthly trend patterns are now the key…
After twice neutralizing their monthly uptrends, it would take monthly closes (on the May 31, ’22 close or any monthly close after that) below 32,283/DJIA, 4116/ SPX (cash index) & 12,825/NQX (cash index) to turn the monthly trends down. That would then project the Sept/ Oct ’22 cycle high to be a lower high in most stocks and indexes.
If, conversely, those monthly trends do NOT turn down, higher highs would be possible in 2022.”
The Russell 2000 has just attacked its 6 – 12 month & 3 – 6 month downside target near 1710/QR – a critical objective that has been discussed since the Russell 2K reached its major, upside (5th wave) objective at 2460/QR in Nov ’21 and signaled a 6 – 12 month (or longer) peak. Now that it has fulfilled that analysis and decisive downside target, the Russell could begin to lead a bottoming process in equities. On an intermediate basis, the next peak is expected in late-May ’22.
Stocks remain in a major topping process, fulfilling the outlook for a decisive peak in early-Jan ’22 followed by a multi-month plunge to begin 2022. That is just the start of a massive shift projected for 2022 – ultimately leading to market jolts in late-2022 through late-2023. An overall 4 – 5 month decline was/is expected between that Jan ’22 cycle peak and the next (Sept/Oct ’22) cycle peak.
What Does Russell 2K Action Portend for Other Indexes?
Will Another Sell-off Follow Late-May ’22 Cycle Peak??
How Does This Impact 10, 20 & 40-Year Stock Cycles Colliding in 2022?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.