Wave 4 on Russell 2000 Appears to be Complete - *Updated 8/25/21 & 12/23/21

The wave count as I see it on the Russell 2000 is showing that wave 4 up from the 2020 low has completed and it is now in a wave 5 which may rise up into around August. That wave 5 top could be the high for the year and would be followed by a multi-week or multi-month correction.

Russell 2000 weekly chart as shown by the IWM etf.(click to enlarge)

Update 8/25/21:

Wave 4 extended out till August instead of ending in June. That 2 month delay may extend the end of wave 5 by about 2 months until around October based on often seen wave relationships. See new chart below.

Update 12/23/21:

The Russell 2000 index completed 5 waves up in November. The high was on 11/8/21 which was not long after October as suggested in the last update. 

Wave 2 often bottoms in the area of wave 4 of one lower degree. The chart below shows a typical Elliott correction wave as per the general guidelines. The Russell 2000 does not always move in step with the other major indexes so it does not necessarily mean that the S&P500 has also topped.

Biweekly chart of Russell 2000 index as shown by the IWM etf.

Bitcoin Wave Four May be Complete *Updated 3/1/22

Bitcoin wave four may have completed at yesterday's low. That will be followed by wave five up to above the April high. 

If wave five is equal to wave one from the 2020 low, that would equate to approximately 65600 which is just above the April high. The wave five upper target could be around the upper long term trendline currently near 260000. 

Weekly Bitcoin Chart (click to enlarge)

Updated 3/1/22: I am revising the wave 5 count if counting the long-term wave 4 as ending at the March/2020 low. This revised count places the top of wave 1 at the April/2021 high. Circled wave 5 of 5 most likely would end near the trendline connecting the tops of circled waves 1 and 3 and cannot be longer than wave 3 in a contracting diagonal. See below chart:

    

Updated 3/1/22 count: Bi-weekly chart of Bitcoin showing the revised wave 5 count if counting the wave 4 end from the March/2020 low. This is counting wave 5 as forming an ending diagonal.

Potential Five Waves Up on Nasdaq Composite index UPDATED 7/7/21

 (updated 7/7/21 - see bottom of post)

The Nasdaq Composite index potentially completed five waves up at last weeks high. 

An alternate count would allow one more 5th wave up above last weeks high in the coming days or weeks.

A decline from last weeks high could drop .382 which would be just above the September/2020 low. This is shown by the top orange line on the below chart.  Another likely support area is at the .50 retracement which is above the middle of wave one up from the March/2020 low(lower orange line).

Weekly chart of Nasdaq Composite index. The .382 and .50 possible support areas for the correction down are show by the orange lines(click to enlarge).

Update 7/7/21:

The alternate count from the 5/6 post is now the best count. That indicates that it is now in a higher level 5th wave. The 7/2 Russell 2000 post stated that the Russell 2000 fifth wave high may occur around August so that may apply to the other indexes as well including the Nasdaq Composite.

 

Weekly chart of Nasdaq Composite Index (click to enlarge)

Potential Long Term Five Waves Up on Bitcoin (Updated 1/18/2021)

 

See monthly chart of Bitcoin below showing a potential five waves up. It has met the minimal requirements for the 5th wave however the 5th wave could go as high as the upper trendline which is currently over 200000. Wave 3 was longer then wave 1 so wave 5 does not need to be shorter then wave 3 and it could also be extended according to the rules. Whatever the wave 5 top is, it should be complete by the 2nd half of 2021 if not sooner.

Once the 5th wave is in, it will be followed by a multi-year and potentially deep bear market that could go near or below the wave 2 low in January/2015 around 153 in a worst case scenario. 

Update:

If considering the wave lengths on a percent basis, wave 1 is the longest wave. With wave 3 being shorter then wave 1, that would mean that wave 5 must be shorter then wave 3. Wave 3 was 11960% long so wave 3 must be shorter. The calculated maximum length for wave 5 is 1,189,380 if measured from September/2020 or 475310 if measured from the March/2020 low. 

The upper trendline is now around 250000 and will rise to be close to 500000 in early 2022 so that may be an argument for the 475000 max target. If that maximum price is achieved it could be as late as the first half of 2022 before wave 5 is complete.

Calculations:

120.6 x 9862.19(Sep/2020 low) = 1,189,380

120.6 x 3941.21(Mar/2020 low) = 475,310

(the wave 3 length of 11960% equates to a multiplying factor of 120.6)   

Chart Update:

Additional pricing data has been found and is shown in the 2nd chart below. This additional data does not change the wave counts. The 1st chart is a monthly chart and the 2nd one is a quarterly chart.

Stock Market Top is in Site (Updated 12/27/20: Chart Added)

Wave Commentary For Stocks:

(For chart update see bottom of this post)

Review

• The last post in May suggested that the February/2020 top would be tested or exceeded. That high was exceeded in August and the market is continuing to go higher as of this writing.
• It was suggested previously that the B Wave of a flat or triangle was in progress from the March low. That has been updated - see below.
• It was anticipated that the March low would be the low of the year. That was correct. 

Wave Counts and Structure

• The market as shown by the S&P500, may be forming a diagonal five wave structure from the March/2020 low. That appears now to be a better count rather then the B wave of a flat or triangle as described previously. They have not been ruled out however.     
• If a diagonal five wave structure is the correct count, it is not clear if it would be a leading or an ending diagonal, however I am leaning toward the more bullish view at this time. A leading diagonal would be much more bullish then an ending diagonal which in a worst case scenerio could be the end of the entire move up from March/2009.

Wave and Cyclical Outlook

• I have spotted a longer term sub cycle that has a peak in the early Spring. It has a tendency to bring tops so that syncs well with this outlook. 
• There are no more bullish cycles this year so if a top is made around March it could be the high for the year.

Weekly chart of S&P500 showing projected wave count as described 
in above commentary. Wave 5 top is projected around March/2021 as shown.
(click to enlarge)

Stocks to Test or Exceed the February/2020 High?

Elliott Wave Status For Stocks:


WAVE COUNTS

1. Wave A up from the March low ended at the April high.
2. Wave B down ended at the Thursday May 14th low and wave C up began.
3. Wave C is in progress.

WAVE OUTLOOK

1. Wave C may test or exceed the Feb/2020 high in the coming weeks or months.
2. The March low is anticipated to be the low of the year for stocks.

WAVE STRUCTURE

1. A test of the Feb/2020 high would imply that a large triangle or flat correction is forming from the Feb/2020 high and not a zigzag as described in the previous two blog stock updates. 
2. Stocks would need to stall near here and then turn down if forming a large zigzag. This does not appear likely at this time. If it does occur, the March/2020 low would be taken out within the next few months