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IWM

Opening (Margin): IWM February 18th 198/233 Short Strangle... for a 3.57 credit. Comments: I'm pretty much in everything at the top of the exchange-traded fund board and wanted to deploy a little more buying power before the February monthly shortens too much in duration, so selling premium in the broad market exchange-traded fund with the highest background implied. 3.57 on buying power effect of 28.05 (on margin); 12.7% ROC at max; 6.4% at 50% max. Will look to take profit at 50% max; manage sides on approaching worthless/side test.
AMEX:IWM
by NaughtyPines
4
IWM: The most interesting chart in the world: As of Friday (Jan 21) IWM has fallen out of a long range of distribution, produced both daily and weekly closes outside the trading range, and importantly has the potential to produce a large move. In this piece we discuss the trading range, mostly from a Wyckoff perspective, show multiple ways to start thinking about how far the move might progress, and finally take a look at IWM in terms of its strength relative to the higher quality SPX. Again, there is not a trading recommendation attached to these observations. The CMT course offers an excellent way to learn more about the concepts discussed below. 1) The most important chart feature is the trading range. Long trading ranges represent zones where supply and demand move into balance. a. Ranges are zones where strong hands / smart money accumulate new shares if they are bullish, or distribute existing shares if they are bearish. b. In early November price attempted to break out of the top of the range, but failed. In Wyckoff terms this is known as a terminal upthrust. The failure is bearish and confirmed the view that the range represented distribution. c. The upthrust was followed by a high volume decline back to the lower bound. The volume expansion and solid thrust strongly suggested that price was likely to break out of the trading range. d. There was some buying as the market tested the bottom of the range for the last time (note the very low volume bounce). My interpretation is that traders who had repeatedly bought the trading range lows, tried to buy again. They failed to recognize the significance of the upthrust and of the development of high volume in the days just prior. Now they are trapped. 2) On Friday, price fell through the range lows, trapping longs and accelerating lower on high volume. 3) Was the volume high enough to exhaust the immediately available supply? I would think not. Modern selling climaxes often take multiple days to unfold, and are not likely to occur this soon after falling out of a long zone of distribution. Remember, the long range attracted many weak handed buyers who are now being forced to liquidate. Targets: 1) There are several ways to think about move objectives. The simplest is to run a Fibonacci retracement of the March 2020 low to the November 2021 high. I keep it simple. I look at .382, .500 and .618. 2) Note that the 50% retracement of the entire move is very close to the January 2020 high pivot. The two form a support confluence in the 169 zone. Given the amount of distribution that occurred in the trading range, I think its more likely that the .618% retracement @ 152 is the most likely one. 3) When a correction develops you will be able to use the TradingView trend based Fib extension tool to project additional targets. Its likely that those targets, combined with the retracement tool and more traditional chart analysis will provide support confluences to work with. Point and Figure charts also provide insight. They don't get nearly the respect of Fib points, but they deserve it. I tend to use the Fibo points as my references, but sometimes, a solid PF range count can add insight. Wyckoff and others taught that the length of time spent in the consolidation is related directly to the distance of the subsequent move. Trading ranges are areas of the chart where large amounts of shares change hands, often from strong hands to weak hands. This is why there is a relationship between the length of the range and the size of the move. 1. Granted, there is no end to the debate as to what points should be used to define the counts. Since I'm a simple guy, I keep it simple. 2. In this case the width of the range is notable. A conservative target falls in the 145 area while a more aggressive accounting measures as deep as 121. So I have targets, what do I do now? 1. I think its enough to know that the targets are all much lower. As the trade progresses the chart will produce more support and resistance zones, target and objectives that will help to narrow the range of outcomes. 2. The final point is that, particularly in the case of point and figure charts, objectives are more guides than they are precise points. When available P&F counts are extremely useful in determining risk/reward in a trade. In the shorter run, the market broke out of its trading range on Friday with a solid daily/weekly thrust lower. But now, in the shortest perspectives it is deeply oversold. If the market does rally, the character of the rally is likely be corrective. I like to look for bear flags or pennants or a rally back to the underside of the broken trading range before the market rolls over again. Final Point: I was always taught to buy the strongest names/groups in uptrends and to sell the weakest names/groups in downtrends. IWM has clearly been weaker than SPX for a number of months. The top panel is IWM, the middle panel is the SPX and the bottom panel is the ratio between the two. If the market is setting up a major correction IWM probably will be far weaker than SPX. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:IWMEducation
by CMT_Association
52
The Week Ahead: XBI, ARKF, ARKG, BITO, ARKK, KWEB, IWM/RUTEarnings: TSLA (63/69). Announces on Wednesday after market close, so if you're looking to play the volatility contraction, look to put on a play in the waning hours of Wednesday's session or, if implied volatility afterglow persists, early Thursday after it has made its move. If NFLX earnings is any indication of whether TSLA will "behave," you may want to consider waiting until after the announcement to avoid a repeat of "the Netflix experience." As it is, the January 28th options are pricing in something bigly: +/- $82 or so, so 862 on the put side, 1026. Exchange-Traded Funds Screened for Rank >70%/30-Day >35%, Implied Volatility Rank Ordered: Cathie Woods' funds continue to have a really bad hair day/week/month ... . XBI (100/48) ARKF (97/59) ARKG (87/66) BITO (82/85) ARKK (82/62) KWEB (74/58) EWZ (51/40) Pictured here is a bullish assumption BITO March 18th 17 short put, paying .60 at the mid price on buying power of 16.40. The broker is still requiring it to be cash-secured, so the ROC %-age is not all that sexy: 3.7% at max (25.0% annualized) as a function of buying power effect. Because of that, I would consider slapping on a cheap put to bring in the buying power effect, but the best you can currently do is to buy the 13, making it into a four-wide paying .38, and that amount isn't particularly compelling, particularly if you're going to be taking profit at 50% max. The ROC %-age is way better (9.5% at max), but I'd rather look at a setup where the long leg costs something like .05-.10, so I may stick a pin in that trade; lower strikes may populate at some point. Broad Market Exchange-Traded Funds, Implied Volatility Rank Ordered: QQQ (77/33) IWM (77/35) SPY (73/28) DIA (72/26) EFA (65/23) In the retirement account, I'll basically continue to ladder out short put as long as IVR/IV remains elevated. This is the exact environment in which I like to make additions on the put side: weakness plus increased implied volatility. Naturally, one begets the other. I'll also be keeping an eye on net portfolio delta to see if additional short delta hedge is required to keep me from getting overly directional which can make things more uncomfortable in a protracted down turn. I point this out because what people primarily see in my feed is "short put, short put, short put" and not the short delta hedges put on that are just kind of running in the background. There is individual trade delta, but also portfolio-wide delta.
AMEX:BITO
by NaughtyPines
IWM [Russel 2000] Inverse Head & Shoulders & BreakoutThe IWM as seen from the chart has been forming a solid and strong Inverse Head & Shoulders. An Inverse Head & Shoulders is a strong Bullish Chart Technicals Pattern, that can be seen here. 2 Shoulders, and 1 head in the middle, making the low. I am sharing this idea, as it is a pattern which has been printed on the Russel-2000 this past week, and can't go unnoticed! The Russel-2000 Index has also been in a YEAR-long consolidation, and is ready to make a move one way or another. On the weekly time frame of the Russel, the TTM_SQUEEZE Indicator a momentum indicator that can also predict big moves has been flashing red (signaling squeeze) and that a big move is coming one way or another. AFTER This recent breakout attempt in November from IWM, and a retest of the bottom consolidation levels, the russel seems ready to bounce up with this inverse head and shoulders, or make a break down. I think this is something to definitely keep on your radar folks! Good Luck Trading! I am personally looking at playing this with either : IWM febuary monthlys OR $URTY a 3x leveraged russel ETF
AMEX:IWMLong
by ZachSap
IWM trade update, and more swing putsIn my previous chart (linked) I gave notice of IWM breaking down from its range. The upper gray line marks the lowest close of the sideways range, and the lower line marks the dip last January. There is a lot of air underneath. I took profits on the dip to 205 yesterday. Today I bought 18Feb puts again at the 208-209 resistance. Now looking at 198 break, then 193, 185. fyi - My option swing trades usually last 1 day to 2 weeks. I only use long calls or puts, single leg.
AMEX:IWMShort
by OptionsRising
2
Opened (IRA): IWM March 4th 185 Short Put... for a 2.50 credit. Comments: Sold premium right at the close in the expiry nearest 45 days to emulate dollar cost averaging into small caps. Holistically, I've been using IWM for shorter duration trades (~45 days until expiry) and SPY for longer duration ones (since it doesn't pay as well as a function of buying power effect), and then coupling that with a longer-dated short delta hedge or hedges. (See, e.g., Post Below). I'm still net delta long, just not as long as I would be were I to be all short put without some kind of short delta aspect.
AMEX:IWMLong
by NaughtyPines
2
$IWM Key Levels & Analysis & Targets $IWM Key Levels & Analysis & Targets Well, here comes that 201 Death cross on the daily Lot’s of resistance to the up side GL, y’all… —————— I usually trade both ways, but lately I’ve been focusing more to the downside because of how high the market is. It makes more sense to sell puts right now, and I’m usually at Target 2 or 3. —————— I am not your financial advisor, but I will happily answer questions and analyze to the best of my ability but ultimately the risk is on you. Check out my ideas, but also do your own due diligence. I am not a bull. I am not a bear. I just see what I see in the charts and I don’t pay too much attention to the noise in the news. If you want me to analyze any stock or ETF just leave me a comment and I’ll do it if I can. (If I have time) Have fun, y’all!! (\_/) ( •_•) / >🚀
AMEX:IWMShort
by SPYder_QQQueen_Trading
1
The Week Ahead: NFLX, ARKF/ARKG/ARKK, XBI, KWEB, URA, IWM, QQQI haven't done one of these in quite some time, but thought I'd do one over this long holiday weekend. Earnings: I looked at a number of these for next week (there are quite a few) and have culled things down to the most liquid options underlyings, ideally with implied volatility rank >70% and 30-day greater than 50%. Only NFLX really fits that bill, even though it's a smidge shy of a 50% 30-day. For instance, I did look at CTXS (87/46), but when I dug into the options table, I wasn't fantastically excited about setting up a short strangle with only 2.5 to 5-wides where I'd want to set up my tent on both the put and call sides. NFLX (76.9% rank/44.8% 30-day) announces earnings on Thursday after market close, so look to put on a play before the end of that session if you're looking to play the announcement for a volatility contraction. Pictured here is a February 18th 450/610 short strangle with the legs camped out at the 13 delta. Paying 9.20 at the mid as of Friday's close on buying power of 52.59 (on margin), it has a 17.5% ROC at max, 8.7% ROC at 50% max. I like to go wider with earnings announcement volatility contraction plays since these do one of two things: (1) come in immediately; or (2) give you headaches for several cycles if the move has been overly large and you have to defend the setup to scratch in a contracted volatility environment. If you're more of a defined risk bent, throw on some wings: the February 18th 440/450/610/620 iron condor is paying 1.90 on buying power effect of 8.10, 23.5% ROC at max, 11.7% ROC at 50% max. Naturally, these are just preliminary pricing and strikes. You'll want to adjust strikes as necessary, since the underlying is likely to move somewhat running into earnings. Exchange-Traded Funds Screened for Implied Volatility Rank >50% and 30-Day >35% and Ordered by Implied Volatility Rank: ARKF (84/52) (Cathie Woods' Fintech Innovation) XBI (83/43) (Biotech) ARKG (79/59) (Cathie Woods' Genomic Revolution) KWEB (60/51) (China Internet) ARKK (59/44) (Cathie Woods' Innovation) URA (41/59) (Uranium) A lot of Cathie Woods' stuff in there ... . I like to reserve these for the monthlies, since the weeklies aren't all that liquid in some of these. Unfortunately, the February 18th monthly is a little short in duration for my tastes (33 days until expiry) and March a bit long, so will probably hand sit on deploying buying power in this area until the March monthly's duration shortens -- it's currently 61 days, and I like to keep things +/- a week or so of 45 days. One underlying that doesn't really have a 52-week valid implied volatility rank is BITO (1/68), since it hasn't been around for 52 weeks yet. However, that "1" indicates that its implied is low within the range its established since inception, and I'd naturally prefer it to be higher even though its 30-day outranks all of 30-days I've got in my little list, so I'm keeping an eye on it, having just exited a BITO short strangle on Friday. Broad Market Exchange-Traded Funds Ordered by Implied Volatility Rank: XLK (46/27) QQQ (43/25) EFA (35/17) IWM (36/26) DIA (24/18) SPY (23/19) I've moved XLK from my exchange-traded fund grid to my broad market grid, since it enjoys a close correlation with SPY (.87 90-day) and an even closer correlation with QQQ. XLK is about half the size of QQQ, so if you like to layer on, it's a little more nimble for that purpose. I've been selling premium in small caps (IWM) in the weeklies to bide my time while monthly setups come in or have to be managed, but may consider sticking some of my pickle into QQQ next week given the fact that its rank implies that it's more "expanded" (if that makes any sense). I'd probably use the March 4th expiry, where the QQQ 16-delta 342/408 is paying 5.69 on buying power of 48.03, 11.8% ROC at max, 5.9% at 50% max. Naturally, the market may look entirely different from an implied volatility standpoint coming off a long holiday weekend, so I always have a second look at whether doing that is worthwhile once the market opens.
NASDAQ:NFLX
by NaughtyPines
5
Week 4, 2022: Market ExpectationsFor Week 4 I am expecting positive movement in the S&P 500, with not all sectors participating. I expect tech to have a dead cat bounce, maybe early in the week, especially when viewed on the equal weight QQQ. I believe it will be a bull trap before moving lower. The most bullish market, and that is used loosely, is the IWM. It looks like it could be forming a bottom, but it might need all winter to firm up. Time will tell Finally, Oil appears to be ready to break out to new highs again. I'm not saying it will be this week, but I wouldn't expect it to break too low this week. Maybe energy will rest for the week, but it might be a place to load up. S&P Equal Weight QQQ QQQ Equal Weight Small Caps Oil
SP:SPX
by SpartyPA28
Leading Indicators not bullish, slow deterioration observedReviewinig the Leading Inidcator Weekly panel... The JNK has a Sell signal, retraced and may break down to a lower low target, as previously expected. Not yet happening, but with a lower high, the bias is closer to the downside. The IWM (Russell 2000 ETF) also has a Sell signal and lower high. Waiting for a lower low confirmation with a break of support. The DJT is also similar. The Value Line failed to close the recent gap, suggesting downside bias. The TIPS clearly broke down through two support levels with a system Sell signal. So this one committed. All the above have MACD technically bearish bias. The TLT is oddly breaking down too. No comments about this at this point of time. Just unusual. The VIX is also unusually complacent, being <20. Technically seeing a possible spike some time in the next two weeks or so. I just added the Copper futures in the panel... according to Russell Napier, Copper futures is also one of the leading indicators we can use. For now, it is ranging and not committed to any trend. I hope we get some committed trend soon! Stay safe!
COMEX:HG1!
by Auguraltrader