Hello everyone, Nathaniel here. I always like to keep two Elliott wave counts in my charts, one bullish and one bearish. Then I like to compare each one and see which one "looks better” as to the way the rest of the market is reacting. I can then determine where I could initiate a position and set stops. I've been following the $RUT closely lately and here are two counts I see that make sense to me.
The bearish chart of IWM I have looks like P2 may have finished for the $RUT. It really looks weak compared to the SPX. I also really like the way the volume looks, very bearish.
Next is the bullish chart I have. If the other indexes rally and the $RUT catches up and breaks it's high, I can see it playing out like this. It would be short term bullish, but then turn bearish again. If it breaks the high and continues up, well back to the drawing board…
Elliott Wave is just one tool I use, but it can help to set up where to enter a position and where stops should be set. Early next week, if I was to go long, I would put my stops at where red B is in the bullish chart. If I was to go short; I might put stops at where the blue 2 is in the bearish chart if we open down on Monday, or at the top of the red C in the bearish chart if we gap up on Monday. Do your own analysis or flip a coin if you like to gamble and want to play in this market, just make sure you have an exit plan if it doesn’t go your way.
