Russell 2000, RUT (Delayed from 18th)

RUT may 20 2018

As far as triangles go, the one featured in the Russell 2000 index is closer to perfection than any of the others. The three wave nature of each and every leg within the triangle is less ambiguous and more plausible and the proportions of the sizes of the legs are pretty well classical, that is approximately 62% of the alternating preceding leg.

Assuming this is correct, at least for this index even though  any conclusions need not necessarily apply to others such as the DOW or S&P, then this pattern should terminate in less than a full month from now at least judging from the apex. A wild guess might be June the 20th. The triangle measures roughly 200 RUT points giving a target of about 1730.

Alternatively a diagonal may have started from the of leg a, which then would be all of a 4th wave. Presently we would be in a minor wave 4 to be followed by wave 5 to complete the pattern. This could take a little longer but would not reach the same height as the upper trend line suggests a top at around 1640. This interpretation seems to be a bit far-fetched compared to the triangle proper.

Either way once completed these scenarios promise a sharp and violent reversal which you would not want to participate in. Particularly if the pink wedge actually applies, you might only have another 1 or 2 percent to go before you find yourself in the equivalent for stocks of Dante’s inferno.