Like the rest of the market, RUT is exhibiting either a pretty deep retracement in the midst of a triangle wave higher or something more onerous —  the early stages of a wave 3.  While the jury is still out, I believe the charts favor the former.

RUT finished a Bat Pattern (in red below) yesterday — this on the tail end of another Bat pattern that I posted just the other day.

Yesterday’s low also registers as a .618 retracement of the AD leg of the first Bat pattern (.618 of 729.75 to 820.44.) which is a typical payoff to a Bat pattern completion.

continued…

Of course, every Bat completion is a Crab Pattern wannabe; as the former reversal at 820.44 could become a Point B in a much larger pattern.

If we look at a slightly different Point X (847 instead of 830) we see that the most recent high of 820 came in at the .786, meaning there’s also the potential for a Butterfly Pattern if the bulls can make any headway.

First, however, RUT needs to get over the smaller (red) pattern’s .886 at 814.33. A trend line off the recent highs slices though 814 around Aug 3.

Note the horizontal red dashed line at 765.  It has shown strong support/resistance at several key points since August 2008.  In fact, RUT shows a fondness for horizontal support trend lines.  Drawing a few of them in got me interested in how past rising wedges have behaved:  they have a habit of tagging their apex prices after they supposedly broken down.

Butterflies complete at the 1.272 (way up at 996) or the 1.618 (1174.)  For the wildly optimistic bunch, there’s a tantalizing possibility that gets prices up that high (no doubt involving QE3, 4 and 5.  A potential RW could be drawn with an apex at the 1.618 of the May 07- Mar 09 drop, or 1174.  Interesting, to say the least.

GLTA.