$RTY: Granular Count (For the Geeks)

This post is a summary of some granular thoughts about wave counting the futures market. It’s a little geeked out, so look away if that’s not an enticement to you.

But, I see something interesting, and it’s an opportunity to discuss an element of Elliott Wave Theory for those interested in honing their skills. It’s a rare wave count, that doesn’t come up often, so it’s worth pondering over.

I’ve had difficulty counting the futures markets because of the CPI spike, so I’ve been ignoring that and focusing on the cash sessions primarily. But, I might have something now.

  1. The only parts of this structure that count particularly well impulsively are the first part (the five blue waves leading to green 1) and the latter part (the five red waves leading to orange c of blue b).
  2. So, on the one hand, were we bullish, we could try to use those two 5-wave structures to form an a-b-c down, and call this a corrective pullback.
  3. But I see few reasons to be bullish here, as the macro-environment is deteriorating rapidly.
  4. And so we can derive what I have below, which makes this a “running flat,” which is uncommon. I will let you examine the chart, and I will add some further comments below it.


If this is a running flat (I don’t know that yet), they’re quite interesting because they’re corrections that move in the direction of the trend, and that is what makes them unusual. Usually, the market trends in a direction, but then corrects in a counter-trend direction. In this case, it should move up. And especially if this is a 2. In that case, it should sort of move up a lot. But as you can see—if this is a flat, and if it is nearly complete here—the end of green 2 has corrected only to the end of green 1. You see how that’s bizarre? Normally, a wave 2 will retrace 50-61.8% into wave 1, and this can’t even barely get back to wave 1.

Now why would this happen? In this case, it would mean that the market is actually so bearish that it has to correct while still galloping down. Ha! It would mean that that’s just how much of a hurry it’s in to go down. What makes matters even worse (for those inclined to be bullish) is that it looks like a corrective pullback, because it’s so choppy. And today’s rally now looks to be impulsive. And so it’s very easy to count this as 3 waves down, followed by a new bullish structure up. But in reality (if it is a running flat), the rally today is the “c-leg” and that should be an impulse, and the whole thing can now be done.

Now, this needs to prove itself, and we need to see a wave 3 down in order to get that proof, but if we do, you can use this post to gain some insight into a relatively rare pattern.

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