On 03/04/24 the S&P 500 made an all-time high unconfirmed by the other two main U.S. stock indices, Dow Jones Industrial Average and the Nasdaq Composite. Perhaps this bearish divergence signaled a major top for the U.S. stock market. If not the Russell 2000 (RUT) small cap stock index could soon indicate a significant top for U.S. stocks.
The weekly RUT chart courtesy of Trading View illustrates its long-term Elliott wave count.
RUT made its all-time high in November 2021 and has been lagging the three main U.S. stock indices by a wide margin.
RUT is nearing a Fibonacci .618 retracement of the November 2021 to October 2023 bear market. The .618 retracement level is typically resistance after an initial bear move.
The daily RUT chart zooms in on the action after the January 2024 bottom.
EDT’s only form in the fifth wave position of motive patterns, and in the wave “C” part of corrective patterns. They are the termination phase of larger degree movements. They form a wedge pattern between two converging trendlines. Each of the EDT sub waves divide into three wave patterns. After conclusion of an EDT there’s usually a rapid retracement back to the patterns point of origin. In this case the 01/17/24 bottom.
The EDT pattern could terminate if RUT rallies above its 03/04/24 high. Time frame is one or two trading days.
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