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IWM trade ideas

Despite a strong week, IWM remains in trading rangePrimary Chart: IWM / Russell 2000 Weekly Timeframe The Russell 2000 (IWM) is often a leading indicator in US markets. It led to the downside in early November 2021 after a false breakout out of its 2021 topping-pattern's resistance around $234. SPX topped nearly two months later on January 4, 2022. While small-caps are not necessarily always the first to make a move, it is something frequently cited by commentators and analysts. This is why the Russell 2000 is important for traders and investors to follow to maintain a deeper understanding of the broader US equity markets. Despite a very strong weekly close for IWM, its price remains in the lower half of its trading range. This trading range has contained price for the past 1.5 years, since the topping pattern's support (at the upper blue rectangle) broke down in January 2022. Unlike other major US indices like the Nasdaq 100, IWM has continued to struggle and remains well below its August 2022 and January / February 2023 highs. Two months ago, in a recent post titled " Something is Rotten in the State of Markets ," IWM's underperformance of SPX provided a basis for discussion as to why US equity markets may remain unhealthy despite the bullish price action YTD (see link below). A strong and long-lasting bull market should show signs of broad participation. Many breadth indicators have shown very narrow breadth. It's not a surprise, in fact, that SPX's rally and upside performance has been driven by 5 to 10 SPX names, with the other 490-495 flat, lagging, or up weakly. Supplementary Chart A This previous April 10 analysis displayed a hypothetical price path intended to reflect the possibility of more sideways and choppy price action in the intermediate term. The choppy price action has largely unfolded as expected (click the play / refresh arrow on the prior post from April 10, 2023). In fact, IWM's price at the time of the prior post was at $173.89, and a month later on May 8 it had closed almost at the same level around $172.72. Now IWM appears to be breaking above the recent trading range. Major levels of resistance appear on the Primary Chart as Fibonacci levels (the .618 retracement and the .50 retracement, which is not technically a Fibonacci proportion) as well as the anchored VWAP from the November 2021 ATH. How price responds to these levels will be important to watch in coming weeks especially after June 16, 2023 OPEX—a quad witching event. It is notable that IWM trades far below its major ATH VWAP from November 2021. Compare how IWM's price trades relative to this VWAP (labeled on the Primary Chart above) with how SPY's price trades relative to its ATH VWAP. SPY's VWAP anchored to its ATH is shown in Supplementary chart B below. Supplementary Chart B Finally, a relative chart of Russell 2000 vs. S&P 500 is helpful to examine these two major US equity indices and how IWM has performed YTD relative to the SPY / SPX. See Supplementary Chart C below. This relative chart shows IWM still in a downtrend relative to SPY. And it still shows that IWM vs. SPY remains below major resistance. Given that IWM is a leading index at times, it will be interesting to see whether what happens to the major resistance on this relative chart that was broken in early April 2023. Will it hold? Supplementary Chart C In summary, the small-cap stocks in the US equity market are lagging despite putting in a strong weekly performance this week of +3.33%. The primary trend in small caps remains sideways by any measure. Will IWM play catch up to the other main US indices like S&P 500 ( SP:SPX ) and Nasdaq 100 ( NASDAQ:NDX NASDAQ:QQQ )? No one knows for sure. But the liquidity problems plaguing the US economy tend to show up in the weakest names first, which usually are also the smallest names. Could IWM's underperformance be a sign of this liquidity stress? Or will it catch up to confirm that the current rally in NDX and SPY are perfectly healthy under the hood and headed to new all-time highs? Stay tuned. And thanks for reading this and for your encouragement and support. ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
AMEX:IWM
by SquishTrade
25
Weekly Update: Do Small Caps Still Lead the Broader Markets?We've all heard that the small capitalized publicly traded companies lead the larger cap companies, more so featured in the broader indices. A quick look back shows the Small Caps Topped in November 2021, whereas the Nasdaq and SP500 did not top till January 2022. Subsequently, the IWM bottomed in June of 2022, and it took the NDX and SPX till October of 2022 to form a bottom. So it appears we do not have to go back too far to see this phenomenon is still valid. If this price action of leading the broader markets continues to persist, then the IWM is now poised to literally "Drop like Rock". A quick observation shows the small caps are around their lows bouncing slightly for wave 2 in our primary c-wave down. You can read my prior posts on the SPX and NDX indices but it appears if you want to know if the recent bullish feeling rally in the DJIA, NDX and SP500 has sustainable legs...look no further than the IWM. Best to all, Chris
AMEX:IWMShort
by maikisch
Wave and Pattern "Force" in actionIWM wave and pattern force "action" or urges." Notice the 5 wave push down (not elliot) as revealed by the poc leveling off at w2 w4 consolidations. Then the down exhaustion and pop to the short seller zone just below "neutral unwound." The space between avwap from the top, and 50% range. Note where poc is. The three big horsemen w gravity, or magnetism. Price tends to unwind to neutral unwound and traders knowing that will tend to step in front "the shorter zone" to exit their longs off the bottom., to get filled. Then tends to "recommit." The common morph would be 12345 down, inverted h&s up to neutral unwound..wedge up and box consolidation up and probe for the week side. ONce the weak side is revealed they would tend to push into it. To a lesser extent they would trap at that point. It's tends to be rangers in charge 70-80% of the time and trender's (big order slow agenda) in charge 20-30% of the time. When one side asserts over the other there is usually a reaction w a biigger (market order chase price candle) as the other side has to "give in" and scramble for the exit an or flip sides. 50% retraces tend to rule, followed by avwap which gives bias to 50%, followed by poc which tends to give bias to each of the others. They tend to all comes within close proximity of each other as the day goes on. The days neutral unwound (50% range/vwap) tends to give bias to the opening 1 min range. If you run that neutral unwound range thru the day note how many times price moves thru it, to it on a normal range day, perhaps 10-20 times on say a 1,2,3 min chart. vs a trend day..may return to it or touch if 1-5 times.
AMEX:IWMEducation
by chartmojo
Calling all investors!Overview The Russell is at a potential attractive buy area for long-term investors. The Details The Russell ( FX:US2000 ) stock index is in a retrace move. Price is currently between the monthly 50 and 100 SMA's. Historically, buying when the price is between the moving averages has been a favourable entry area for long-term investments. Things to Consider Recession could be on the horizon for the US. This would likely drive prices lower, especially for the Russell 2000. Using an ETC, such as IWM, is often better for investing in stock indices than futures or OTC products. Other stock indices may decline further before reaching new highs. The positive correlation between stock indices could bring the US2000 down further.
AMEX:IWMLong
by Samuel_Morton_Trader