Lets take a look at the small cap ETF IWM (Russell 2000 index).

The Small caps tend to lead both on the upside and downside.  This index has been hit almost 10% from the highs.

Right now it really looks like a Major 4th wave or Primary 4th wave from the 120.xx highs to the 108.xx lows recently.

Examining the Extension wave 3 from 70 to 120, we would look for a 23.6% fib retrace, 31.2%, or 38.2% retrace of that 50 point move right?

So far we have hit the 23.6% shallow retrace at 108.xx and the IWM is around 110

The next level is 104.50 plus minus 20 cents or so for the 31% fib retracement level

So we would say that if you look at the chart below and examine the LOWER stochastic indicators, you can see where during this Bull cycle the IWM ETF has bottomed each time with similar oversold readings.   Given that we are in a mid year election cycle and the market tends to be choppy to down till July or so, we think the small caps are trying to put in a bottom perhaps in May.

Stay tuned, but there are some extreme values showing up in the space on a stock by stock basis….

Elliott Wave Analysis