US2000 trade ideas
$RUT Canary in the Coal MineThe Russell 2k tends to be a solid indicator of broader market movement.
While we have realized a correction of ~33%, given the broader macro headwinds... this is not nearly the level expected relative to past major corrections (dot.com & housing market).
Given the past major corrections of 47% and 60%, not including the global pandemic shutdown it's apparent theres further markdown market behavior ahead.
At the least, expecting a pullback to the 100 EMA is minimum expected while pullback to the 200 EMA with a further wick down from there is not outside of reason.
The Fed has only recently begun QT with Central Bank balance sheets letting securities roll off as they mature.
With the Fed hyper-focused on inflation with demand side tools at their disposal, the bearish case remains firmly in place right now.
In addition to rates, unemployment is part of the Fed's dual mandate. Given the sheer # of available jobs (2 jobs for each unemployed person in the US), the Fed has plenty of room to focus on reigning in inflation to achieve price stability.
Will there be bear market rallies? Yes.
Will the Fed pivot? Possibly... especially given mid-term elections this fall.
Q2 closes next week, earnings will start pouring in... until the Fed changes narrative and there's substantive change, principal preservation should be the priority with a risk-off focus unless one is highly skilled at trading during extreme volatility.
US2000 has more room to fall !!RUSS2000
Intraday
We look to Sell at 1699 (stop at 1714)
We look for a temporary move higher. Risk/Reward would be poor to call a sell from current levels. The bias is still for lower levels and we look for any gains to be limited. Previous resistance located at 1700. Expect trading to remain mixed and volatile.
Our profit targets will be 1645 and 1605
Resistance: 1700 / 1750 / 1945
Support: 1640 / 1470 / 1200
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$IWM very attractive relative to S&P 500 (5/5)Shall cap relative performance to Large cap is showing a great opportunity.
REcently we have also seen the small caps valuation is as low as GFC levels, which is another indicator of good long-term buy opportunity.
Small caps (IWM) performance to self is not quite as attractive, so be aware. This could simply be an opportunity to do a long-short spread between small caps and large caps.
RSI is not quite as attractive as 2020 bottom, but nonetheless a good place to start adding.
US2000 RussA few notable demand spikes on the weekly. Appears as if it is possible for an accumulation cycle to begin here in the next few days/weeks. Typical behaviour and standard targets. We will see its behavior as it nears some previous demand zones/order blocks.
will follow up once it triggers some low alerts.
Russell 2000 - US Economy in Trouble, 50% Shorting Opportunity?Although big indices like S&P500 and Nasdaq, favouring large cap companies, have still got potential to update historic highs - what is small caps index Russell 2000 telling us?
It has already dropped by 30%, is there more downside and is it indicating that real US economy already in trouble?
Technical Analysis (Elliott Waves):
Looking at weekly timeframe it is visible that sharp drop in March 2020 has completed fourth wave of an impulse that has been developing since the great financial crisis of 2008
The proposed scenario suggests that the 5th wave has culminated in November 2021 and since then the next global correction has started which is likely to last even longer than the previous one that stretched from 1998 to 2009 - it's shocking to think of a correction for 11 years or longer
The most interesting opportunity however, is the potential development of an Expanding Triangle which may have been formed with A-B-C-D waves already
And given that there was an optimistic bounce on Friday 13th May in all the markets, there is a potential move for Russell 2000 towards $2140 to complete this triangle
In this case the next move to the downside may have a great opportunity with nearly 50% for shorting the index and expect the target in the range between $1000 and $1300 which represent 0.618x and 0.5x Fibonacci retracement levels of the global wave 3
What do you think about this idea and US economy as a whole?
Please share your thoughts in the comments and like this idea if you agree wit it.
Also let me know if you would like to see other stocks, indices or Forex pairs analysed using Elliott Waves.
Thanks