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Russell 2000: Pursuing the Trend of the Giants

Elliot Wave Analysis for RUSSELL 2000

Russel 2000 is the stock market index of the United States consisting of the 2000 small listed companies, based on their market capitalization. It was introduced in 1984 by Frank Russel, and his company is a subsidiary of the London Stock Exchange Group. The average market capitalization of a company in the index is $3 billion, having the company with the largest capitalization at $10,1 billion. That’s why is referred to as the benchmark of small and medium-capitalization for U.S listed companies.

The Russel 2000 is traded at 1677,75 points, when the all-time high was recorded at 2458,85 points in November 2021, and the all-time low was at 106,07 in October 1987.

Monthly Range: Completing wave ((5)) of III

            The index, as being smaller than the S&P 500, follows the trend and its psychology of it as is shown in the monthly trading chart (log scale). Having said that, we see the same pattern in the crisis moments in 2000 – 2003, 2007 – 2009, and in 2020, as the other U.S indices. Therefore, is not difficult to observe that the impulse that is unfolded must have also its ups and downs.

            Our counting focused on the construction of the final ((5)) Primary of the III Cycle wave. So far, the index has made an extensive sub-wave of the (3) Intermediate of the ((5)) Primary wave and it seemed that has already started a decline for the (4) Intermediate of the ((5)) Primary wave. Just for illustration and educational purposes, within the chart is drawn the 38,2% Fibonacci retracement level of the (3) Intermediate wave which is at 1158,13 points. Moreover, the end of the (1) Intermediate wave was at 856,39 points, which is between the 50% – 61,8% retracement levels, at 917,81 and 727,36 points respectively.

            Thus, till the index falls slightly beyond the 50% of the (3) wave, we can be sure that the subdivision of the ((5)) will be an impulse. But, according to the Elliot Wave Principle, the fifth wave can also be formed as an expanding ending diagonal, which means that we should see an overlapping between the (4) and the (1) of the same degree, the (4) will be greater than that of the (2) Intermediate wave, and the upcoming (5) Intermediate of the ((5)) Primary will be greater than that of the (3) Intermediate wave.

            Nevertheless, in this uptrend basic scenario, we have an alternative idea. This says that maybe the whole structure has completed the V Cycle wave, so it should be labeled as the (I) Super Cycle wave and the correction is part of the (II) Super Cycle wave.      

Weekly Range: Completing wave (4)

Having zoomed in on the weekly trading chart (log scale), we can see how this (3) Intermediate wave, based on the basic scenario, has been subdivided into its 1 – 5 Minor degree waves. Again, the alternative scenario stands for the beginning of a downtrend as the unlabeled (II) Super Cycle wave.

Daily Range: Correcting in wave (4)

            On the daily trading chart (log scale), based on the basic scenario, we see the thrust in the (v) Minute wave, after the descending triangle for the ((iv)) Minute wave, completing the 5 Minor of the (3) Intermediate wave.

            The lower highs and lower lows turned the main uptrend into a downtrend for this chart. Hence this is considered the first leg – unlabeled A Minor wave of the (4) Intermediate wave – of an A-B-C zig-zag pattern, or a double zig-zag as a W-X-Y. Besides, a rally that will approach or even break the peaks at 2138,45 and 2288,30 would confirm our estimating pattern in the short term.      

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Written by Trade Zign

TradeZign (TZ) is a market forecasting firm,TZ's 10 full-time analysts cover every major market (commodities, stocks, energy, bonds, metals, currencies).

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