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Truth is timeless: “Markets never change” – Jesse Livermore, 1923 The early masters, Livermore, Wyckoff and Loeb isolated themselves from the crowd and crowd thinking. None of them ever graduated high-school and yet they each became legends in the market. Their techniques have been time-tested.... More
  • Russell 2000: What Happens Now? 0 comments
    Jul 31, 2014 1:47 PM | about stocks: IWM

    For quick reference, a summary of the significant market calls on the iShares Russell 2000 ETF (NYSEARCA:IWM) are provided below:

    The top and reversal

    Elliott wave structure

    Downside target: 104

    Counter-trend move complete

    About to get ugly (for the bulls)

    Admittedly, there was a slight miss-calculation (0.40-points, the distance between 115.25 and 115.65) as to the exact counter-trend high prior to the current move lower.

    However, once the counter-trend move was complete, it was instantly recognized (within seconds) and an update was posted.

    Today's session has moved to within 0.06 points of posting lower than 111.11, which would create an out-side-down monthly reversal.

    At the time of this post, the IWM is attempting to rally off of its low. Today's close may be significant.

    The chart below is updated to show the Elliott Wave sequence (and projection):

    (click to enlarge)IWM Hourly Chart

    Chart by TeleChart

    How does this all correlate with the data releases of the week. The market should have responded positively to a stellar GDP

    Fundamentally, the GDP number shows that the economy is doing much better. The IWM should have rallied.

    Early on in his career, Wyckoff determined that market forces were at work that had little to do with fundamentals.

    We can determine with confidence that nothing has changed.

    These events (data releases) are essentially meaningless when it comes to determining what the market is going to do next.

    We need to always be on guard for any change in market character.

    Although confident in the forecast to the 104 area, if the IWM manages to penetrate the resistance area shown above to the up-side, the analysis for a continued down move will need to be changed.

    Disclosure: The author is long TZA.

    Additional disclosure: Illustration only. Not investment advice.

    Stocks: IWM
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