Tuesday, November 10, 2009
Russell 2000 Just Printed a 5 Wave Decline
The Russell 2000 and it's basket of high risk small cap stocks has proved to be a great predictor of future movement for the overall market as it has been ahead of moves the past several days. This morning it just completed a small 5 wave decline from the top of what appears to be a WXY correction. Counting the rally in the Russell as 5 waves, and therefore signaling that a new uptrend has started, is very difficult and it counts much better as a countertrend move, a corrective WXY. Small time frames are not that reliable, but since today is so important for the markets I'm putting my magnifying glass on everything. The dollar has also shown some strength later in the day and silver is down quite big today. All are contributing to the bearish case, although it's not a very strong one yet.
Let's see if the Russell 2000 is again predicting future movement for the market with its 5 wave decline signaling it's topped and has resumed its downtrend. The bearish signal will remain intact as long as its highs of today remain intact at 593.57.