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Wednesday, October 28, 2009

RUT Broke the Oct 2 Low !!

The Russell 2000 (RUT) Broke the Oct 2 Low!!!

This goes along with my last post Reading you Five by Five

So your first reaction might be "so what? They are just small caps."

But they are not. INDU, SPX, RUT, COMPQ and NDX cut across the economy. They each have components in Energy, Financials, Health Care, Consumer Products, etc.

And I have always watched all 5 and have always maintained that the best count is the one that works on all 5!! Sometimes there is disagreement on subminuette waves, but 99% of the time, they all fit nicely in the same wave structure - AS THEY ARE SUPPOSED TO! Remember, these are economy-wide indices and reflect how the market perceives the economy.

But this is not a minor issue. If you are maintaining a bullish count / theory / stance for the near term, then *** THERE IS A MINUETTE DEGREE DISCREPANCY BETWEEN MAJOR INDICES!!! ***. If you think the SPX is in a 1-2, then 2 just went past 1 on the RUT. A huge no-no

And I call BS on that.

NO, I think it is far more likely the the RUT is leading this down and forecasting the much more bearish count option. The end of P2? Maybe. Lets evaluate that one later.

In the meantime, those of you thinking this is just a routine pullback with dip-buying followed by another big rally are likely to be very surprised and disappointed.

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