S&P 500, Russell 2000

I got a comment asking if I have a wave count for the S&P 500 (SPX) and Russell 2000.

The SPX is ambiguous because of the action during May-October 2013. It looks like some sort of consolidation period, but it doesn’t fit an Elliott Wave corrective pattern very well due to the upside bias. Also, the drop in Jan-Feb 2014 looks less significant than on the Dow and NASDAQ indices.

spx 2011 2014

If we look beyond the wave details, a major statistic for the SPX is that the Oct. 2011 – Jul. 2014 exceeded the Mar. 2009 – May 2011 rally on a point basis. On a percentage basis, a continued rally to ~2200 would match the 2009-2011 upswing. With a domestic economic environment that’s decent but not excellent, it’s hard for me to expect more than that.

For the Russell 2000 index, 2011 was a bit difficult.

rut 2011-2012

The combination correction count (Feb-Dec) that looked good on the NDX (and to a lesser extent the Dow) doesn’t fit so well on the Russell given that after the summer crash, the index stayed below the Feb-Jun trading range for the rest of the year. If we make Oct. 2011 the low, then it’s hard to tell what was going on during Nov. 2011 – Nov. 2012.

However, on the RUT, it looks like March-November 2012 was definitely a Running Flat given that the June-September rally was unmistakably a 3-waves rather than 5-wave upswing.

rut 2012


On the Dow, SPX, and NASDAQ indices, that same rally could have been either 3 or 5 waves. 5 waves would rule out a flat and make it a nested impulse sequence instead. I decided to let the NDX be a flat because the whole period of Mar-Nov 2012 looked like a major interruption to the longer term rally. On the Dow, the pattern was more upside-skewed, so I let it be a nested impulse, which also worked well with my Dow count for 2013-2014 as shown in my previous post.

Getting back to the Russell, there seems to be an obvious correction this year even though it’s hard to label.

rut 2014

So, with the Russell, though the details aren’t perfect where Elliott Wave is concerned, I think the basic idea is this:

RUT 2011-2014

With four intermediate waves already, a rally to new highs is likely to be followed by a correction bigger or longer than anything seen since 2011.




Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s