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Relativestrength

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.
Editors' picks
AMEX:IWMEducation
by CMT_Association
52
Genpact $G with the follow throughAfter a breakout in december 22nd, NYSE:G had a throwback and now is a about to make another buy signal above $54. Also, as the NASDAQ:IXIC made lower lows, Genpact has made higher lows. That's good relative strength, and that's what leaders do. This year the company reported sustained revenue growth in all of its sectors. According to @TradeStation, GenpactLtd revenues reflect Consumer Goods, Retail,Life Sciences and Healthcare segment increase of 18% to $1.1 B, High Tech, Manufacturing and Services segmentincrease of 3% to $1.08 B. So, very good fundamentals. The stories that would power up the price could be its recent partnership with HighRadius; an artificial intelligence-powered Order to Cash. And the acquisition of Hoodoo Digital, a digital experience consultancy with deep expertise in Adobe solutions.
NYSE:GLong
by dpuleo19
CDW breaking out of a 5 month base with volume!* Perfect earnings * Very strong up trend since inception * High 3-month relative strength of 1.65 in the Tech sector * Pays out quarterly dividends and just last quarter it increased its dividends! * Broke out of a ~5 month base with volume * Broke out late December and has been consolidating since then right above the breakout point * Even with the uncertain market conditions it's managing to stay above the broken base. Trade Idea: * You can enter at today's closing price if you don't mind a little volatility. * If you're looking for the perfect entry, you may wait for the price to turn a bit lower and enter near the $203.30 area * Due to current market conditions it's better to wait and see what may happen. * If you're a bit more conservative you may wait for a break above this current range and look for an entry near $207.72 Caution: * A daily close below $198.14 would negate the idea.
NASDAQ:CDWLong
by HaseebKhan_90
DLTR - Dollar Tree, Inc.Bought position as the stock came thru the high-volume pivot from Dec 10. The stock has been one of the strongest in the market, gapping up and out of a very long-term base on an analyst upgrade in November and having a very strong day on earnings. Since earnings, it has digested its move very orderly and with very low volatility. It looks like it may be ready to attempt another leg higher, but since this name does not have the strong earnings numbers I usually look for, I will be aggressive with profit taking.
NASDAQ:DLTRLong
by apaqu
ETH + Alts Beating BitcoinWith the help of my most recent script ROC vs BTC we can see that on the 4H chart we've been seeing some strong divergence, with Ethereum and Altcoins outperforming Bitcoin on a relative basis. Bear in mind this isn't a case of comparing apples and oranges, where Alts always tend to "outperform" BTC during waves up and down due to higher volatility, the volatility is accounted for by measuring each ticker's ROC against it's own historical ROC and ranking it as a percentile. Then the same is done for BTC and the 2 are compared. What does this tell us? Well one thing could be that if we wanted to play the long side on BTC in the short term it may be better to go long on an Alt that has been diverging and seeing strength during Bitcoin's weakness. On a larger scale it may be a sign that in the short to medium term, we could be seeing a drop in Bitcoin dominance and a rise in the Alts.
Long
by HayeTrading
10
OMCL showing signs of moving higher with a pocket pivot?* Great earnings * Strong up trend * Very high 3-month relative strength in the Healthcare sector of 10.44 * Trading at higher than average volume creating a pocket pivot * Trading in a tight range of ~5% range * Little to no overhead resistance * Has held up incredibly well during this correction with little to no downside at all. Trade Idea: * You can enter as indicated before the breakout from the range. * This entry will net you a better risk/reward ratio but with the risk of not breaking out just yet. * If you want to be conservative given the current market conditions, it may be better to wait for the breakout (a daily close) above $182.73 before entering. Note/Caution: * This is a pocket pivot entry and although it has little to no resistance, it may not break out immediately. * Pocket pivots indicate institutional interest in the stock.
NASDAQ:OMCLLong
by HaseebKhan_90
6
Steel Partners $SPLP, technicals over fundamentalsSteel Partners is one of the leaders in the acquisitions business and with a well diversified portfolio reported an increase in revenue of +18.70%, as compared to the same period in the prior year. Also published an increase in EPS of +24%, but its net income and net margins decreased. This aren't the best fundamental siganls but at least has two quarters in a row with revenue growth. Now the techniclas have all that I look for. With a IBD RS rating of 99, high volume in up days and low volume in down days, and still in the breakout zone I decided to buy 1/4 of my postion sizing. I decided to start small because the market environment is still bad, and the stock hasn't make a new all time high. I plan to add to my position at the breakout above $38.50 and if it follows through. I'd like to add that maybe, one of the main reasons of the recent rise of NYSE:SPLP is because of the increase in value of NASDAQ:STCN . Steel Partners holds a 41% ownership.
NYSE:SPLPLong
by dpuleo19
Stocks to Watch Relative Strength Edition The Market's longer term uptrend still intact but short term looks precarious. These names have shown good relative strength and accumulation volume and most are in the growth sector. This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 24 total stocks on this list Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
Editors' picks
QLong
by Jtacher51
20
Leaders within Leadership (a.k.a. Fish where the Fish Are!)As breadth deteriorates across major indices, managers look to hold outlying leadership. This week it has been performance in tech and consumer discretionary holding up the S&p 500. If you drill into the top holdings of $XLK, the info tech sector, you see selling pressure in Adobe $ADBE, Salesforce $CRM, Microsoft $MSFT and others. There are only a few leaders within the leading sector. Apple Inc. $AAPL and NVIDIA Corporation $NVDA are standouts. The GoNoGo Chart above shows the trend conditions of NVIDIA Corp.'s relative strength against the tech sector $XLK. Unlike $APPl which has a choppy relative trend, $NVDA has steadily outperformed the sector. In turn $XLK has outperformed other sectors in the S&P of late. With 84% outperformance of the technology sector since the "Go" was flagged in May, NVIDIA Corporation is checking boxes for both absolute and relative performance. Note, GoNoGo Oscillator(R) is testing the zero line where we will look to find support if this trend is meant to continue. GoNoGo Squeeze(R) is beginning to build the amber grid. The longer momentum is at neutral the greater the likelihood for a high vol move in the direction of the break.
NASDAQ:NVDALong
by TylerWood2020
2
Stocks to Watch Relative Strength Edition The Market's longer term uptrend still intact but short term looks precarious. These names have shown good relative strength and accumulation volume and most are in the growth sector. This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 24 total stocks on this list Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
NASDAQ:XAIRLong
by Jtacher51
3
Stocks to Watch Relative Strength Edition The Market's longer term uptrend still intact. These names have shown good relative strength and accumulation volume and most are in the growth sector. This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 24 total stocks on this list Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
NASDAQ:MTTRLong
by Jtacher51
6