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IWM trade ideas

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
scalpers paradise (IWM)this is purely educational, and not investment advice. get professional advice before investing. there is nothing more predictable than reversals of the broad trend. take iwm for example. small caps are extremely sensitive to large volume market moves. small caps obey a general ruleset that ties their values and fundamentals to that of larger names and other indices as well as the dollar index. this doesnt mean small stocks move with the large names that are a much safer passive buy. the david and goliath relationship between businesses of varying internal and market values is nuanced, and unique in the world. the different ways companies keep cash on hand and their comparative debt ratios are like a slip fault. tremors begin in a given epicenter, usually a specific sector or subset of an index or sector, and they radiate out through closely to more distantly related groupings while the broader equities market as well as other asset classes absorb the impact. depending on how the smaller names are related to those prices, whether its a commodity or corporate bond, currency pair, what have you, the impact can be more or less volatile. impact, be it positive, negative or having a calming/sideways movement, can determine direction and magnitude of a trend (sometimes directly or inversely proportional to the affected grouping) in confirmational bias to the existing trend, or indicate reversal. it is these reversals that make a scalpers job so easy. avoiding the large part of a move, and only funding a trade during periods of reversal seems like giving up the fort. in reality, this castle keep so to speak adds a consistency and implied judgement to the soundness of a prospect. speculation is essentially eliminated, as the stock is so overextended in its involvement with whatever makes the move as to be an impossibility for the trend to continue. paying close to the direction of each arrow during a reversal in small caps, youll notice that nothing is pointing down. this is not because you shouldnt short IWM. this is just indicating how your stop loss always trends up, as profit can only realistically be kept in one direction. as the trend changes, and candles either begin to break lows or highs, the pattern of a higher low or lower low every candle on the next timeframe up will begin to break. one can make only long or short trades in either bull or bear case this way and still profit reliably. every small arrow can be a short or long, and this means the movement is far easier to forecast. entry and exit is determined purely by strict adherence to determined directionality and support or resistance levels. use a computer aided tool for this. dont rely on your own judgements or calculations. stay rigidly latched to your levels so as to trade like a robot would. you can add some padding to precise levels, but it shouldnt exceed a proportional amount to the movement that is changing. always trade on closure below or above certain reversal levels on a larger timeframe indicating a break in the trend and quickly average in as each new candle on a smaller timeframe confirms the break of trend. both directions are valid, so keep tight stop losses to lock in profit. this will mean orders need to happen rapidly. take your time, and pay close attention to things like bid/ask and levels in the order book, but rapidly return to being able to make your next move as opposed to something distracting like news or another chart. order most cost basis at the beginning and average smaller amounts as trends reverse. the fastest part of the trade in oversold bounces/overbought retracements is also the point where the most profit can be lost, so you dont want to take a bigger bite as velocity increases. dont follow the trend after it changes. the point of scalping is that moves are more predictable in smaller sizes. you are capitalizing on the volatility of an asset, not the trend of the movement itself. you will need to use much of your available cash to do this; upwards of 78%. the next move after a reversal can always be a fakeout to second reversal. i have pointed out some fakeouts with larger arrows. as your junior most assets reach a value that of your sr most assets cost basis, exit the trade. wait patiently for another trend reversal, and take smaller general direction trades in between with a looser stop loss that you can be more relaxed with. rsi is going to be in the low 20s monday. where do you think this could go?
AMEX:IWM
by cerealtrades
IWMDaily Chart Report IWM is in a free fall. When a stock breaks through two support level in one go, you know how bearish the chart is. The first stop is at 190 support level and then head to 168 major support level. I want to note that there is a possibility that IWM might have a small bounce in the coming week to retest the breakout before it heads lower. The bounce will be a dead cat bounce possibly to the 204 level. It is short for the next few months. I will be fading the rips.
AMEX:IWMShort
by pravenmoorthy
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
IWM set to take a leg down. IWM (russell 2k ETF) has been stuck in a ranging rectangle consolidation pattern for like a year. Everyone can see it, it's definitely no secret. This is why I think the last bull spike above resistance failed and was sold off; it trapped a lot of people who assumed it was an upward breakout. Anyhow, this simple mockup just adds more bad juju, as you can see it's formed a descending triangle pattern in addition to the 200SMA now being resistance. Both of these are very bearish. I am shorting IWM simply too many factors against it....with these two just dumping fuel onto the fire. We might see a bounce at support, yes, but with each bounce lately has came less and less volume. Im interpreting this as the bulls losing confidence, while at the same time the declining trend line that makes the "descending" part of the triangle clearly shows the bears are jumping in earlier and earlier. I think it's just a matter of time now before we formally break the support of the bottom of not only the triangle, but the rectangle bottom support line just below it. It was a good ride!
AMEX:IWMShort
by digital_precision
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
Time to short the Russell 2000 ETF IWM, and here's why.Here is a chart of the entire IWM ranging behavior over the past like 9-10 months. You can clearly see the resistance and support lines. The top resistance line also coincides with the R1 monthly pivot resistance line. Below is the OBV with the same ranging behavior over the same time span. Obviously, volume should confirm price.....and up until recently it more or less has, also ranging up and down between the support and resistance lines drawn on the OBV indicator itself. My point is...... look at the far right, where the purple rectangle boxes are. See the problem? OBV has already plowed downward well out of the rectangle and below the support line. Notice how it also never confirmed the prior IWM break out of the range. It was a leading indicator there that the break out would fail.....and it did. Now it's clearly indicating that IWM is going to blow right through that rigid support line it's bounced off of many times before. My money is betting on that it's right.
AMEX:IWMShort
by digital_precision
$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