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...
It seems by all indications that we are heading into a bear market. With raising interest rates, tapering, and shrinking of balance sheets, we will see the Russel take at least a 20% tumble from the current price. The 100MA puts the Russel 2000 at around 1400, and further down on 200MA. A couple of key points:
Only 40% of Russel 2000 are above 50-Day MA.
Only...
Puts have done very well on small caps (chart is linked). Now indicators, especially RSI, show that selling needs a pause and IWM can rally up from here.
I bought weekly 198 calls and will exit between today and Wednesday. For this trade I am making a full exit if price breaks 191.
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...
Russell 2000 represented by its ETF counterpart IWM has now broken a major 1-year support level. This level has provided support (with only minor breaks that ended up reversing) since approximately February 2021.
Interestingly, IWM had a failed breakout / rally back in early November 2021. After about 12 trading sessions, the breakout completely collapsed and...
It appears that we have a lot of uncertainty ahead and now is a good time to plan ahead to be sure you aren't left holding the bag.
Short Term: Up
Longer Term: Down
If you combine all the buying and selling across all the major indices you start to see the following:
1.) Sell off volume to the downside is higher than buying volume.
2.) Noya indicator showing...
IWM has been rangebound for almost one year now. Price was around highs of 170 before the "Covid drop." The 212 area is strong support, but it may break soon. Since price broke out of the upper resistance and fell right back into range, a break of support may soon follow.
Let me explain how I use stochastic %K warning signals, which usually lead price...
Visual analysis strongly suggests the Russell's rise from covid crash is a three wave fake MMT induced wave. If that's the case, what might come next? This is just a wild guess. Could be completely off my rockers.
Daily Chart Report
IWM finally breaking to the downside. The first price target is at 198 support level. It think it could move even lower. According to the TA a full measured move to the downside is at 168 support level.
We broke down from a year long Darvas box.
We broke up last year then failed. That was the biggest signal last year that something is wrong.
2022 will be a long year if you are not prepared for it.
It's the first time they're below they're 200 DMA since September 2020. It's been holdings support for a year and looks like trend broke, but this smells like a trap.
In 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...
... 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...
If IWM fails to hold 205 then we are going to see a quick downside move to 169. There doesn't appear to be many buyers or sellers between the two VPVR valleys (on the right).
... for a 2.09 credit.
Comments: Emulating dollar cost averaging into small caps via a 17 delta short put in the contract nearest 45 days until expiry. Currently, the highest 30-day implied volatility broad market exchange-traded fund on the board with 30-day at 27.0% (although QQQ comes in a close second at 26.5%).
... for a 3.27 credit.
Comments: Here, just adding in a little IWM in the weeklies around 45 days until expiry while I wait for the March monthly to shorten in duration to do other stuff.
3.27 on buying power effect of 26.15; 12.5% ROC as a function of buying power effect (on margin); 6.3% ROC at 50% max.
Arca
