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IWM trade ideas

Time to Long IWM? Is it time to long IWM after today's bul run? To get to the point, IMO, No. Here is my analysis and plan with IWM: Fundamentally: Some of the biggest stocks with the most growth of 2021 were small cap stocks, which IWM tracks. These are the stocks that are being hit the hardest with this market correction. *cough* AMC *cough*. Historically: IWM has surpassed SPY and DIA in correction/sell off during rough market times. It has lost between 64% on the high end and 24% on the low end in these market down turns (looking at data from 2008, 2018, COVID). From its ATH high in November, we are currently at around 22% (rounded up). There is a possible 2% to 44% left of correction. Chart Trend: Obviously, we are in a down trend. (No! Really?! ;) ) SPY and DIA are appearing in a flattened, pancake pattern (usually indicating an impending aggressive move coming). However, ARKK and IWM have re-established the bearish flat top indicating a strong down-trend, even after today's EOD bull-run. Mathematical Modeling: IWM has been on-point in regression analysis these past 2 weeks. Today, regression models I have made of IWM predicted a possible low of 189.06 (with SD=9). We made a low of 188.09, a 0.97 point difference and well within the SD variance. I had predicted a possible high of 193.58 (SD=9), with an actual high of 195.31, a 1.73 point difference and well within the SD variance. Even after adjusting the model with today's variables, the model still predicts a continuation of lower highs and lower lows in the coming week. Furthermore, there has been no invalidation of the regression model, even with the bull run at EOD. The stock still performed within accepted limits of the regression model. For an invalidation to have occurred, the stock would have to have at least tested 201.58 on the high end or 180.06 on the low end. This would indicate a change in sentiment and a call to re-look at the stock's behaviour. This was not the case today. Probability: I don't like communicating probability to other people, I simply use this as my own gauge to set realistic price targets. But I will share my thoughts, The probability favours a move to the upside here. However, keep in mind that probability in trading is highly biased. Its biased because it does not take into account time (so there is generally a favourable probability to the upside vs the downside, but no indication of when that is and this is true for truly any stock, stocks in general are long biased). The other bias is that this data is based only on January data and probability favors where most values fall. In this case, most values fall above 200 points for January and thus, as far as probability is concerned, there is more likely a chance of reaching a value in the 200s because that is where most values fall. Yet still, probability is a powerful tool (IMO) to use and its worth mentioning. The probability that we reach a value between 196 and 200 is roughly 5%. However, the probability we have a low of less that 200 points is actually fairly high by trading standards, its 27.45%. Not bad! Possible outcome next week: The market wants to make a big move. I mean, those of you who actively trade in the market every day can see it. With these huge bull runs followed by huge bear runs, this bouncing everywhere, the market is itching to make a huge move in some direction. Heikin Ashi on DIA and Spy are pancaking indicating a build up and desire to break out in some direction. LR Forecasting for Monday are positive, with slightly higher highs than today. However, this is followed by a decline in highs and lows with a move to the downside. In the past, during sustained selling off, IWM likes to do bounces on the way down that stretch about 8% on average. So it may not be unreasonable to observe a bounce in the market tomorrow. This would put IWM at a price of around $204. From there, it is possible we go lower. Much lower. Forecasting shows lows could be as low at 175 next week (however, I never trust data more than 1 or 2 days out, without correcting with previous day data, so I would wait for Monday data before doing anything with this information). My Outlook: I tend to be short biased. I am going to be looking for a break of 196.07 with good volume and bullsih appearance on hekin ashi to POSSIBLY go long up to around 200. I will be looking at around 200-204 (if we do that high) to short, provided I see this in the price action. I think we need a bit of a bounce to stabilize the market. The RSI on IWM is stabilizing out from being oversold to being in an area where it could make a bit of a move lower. To be honest, I have no idea where we are heading. I tend to think we are heading to the short side. If I have to put money on it, I would bet the short side. However, I am not swinging any position period in this current market. My trades are intraday and that's it (aside from a short position I currently hold with BA). Today I played IWM on both the short and the long side. And plan for that to be the case next week as well. DISCLAIMER: Not financial advice. Not a financial advisor. Just an ex-epidemiologist who enjoys mathematical modeling. At the end of the day, I trade price action. I use regression analysis to plan my entries and exits and chart support and resistance levels (I find it more accurate than looking at the chart). However, its not always correct and I am sometimes wrong. Manage your risk! Its okay to be wrong, and you will be wrong, just manage your risk and you will live to see another day. Its not the end of the world :). My linear regression models are done in SPSS. I can't share pictures, but am happy to answer your questions. Have a great weekend!
AMEX:IWM
by Steversteves
2
Buying IWM calls for swing tradeI am using 30 and 5 min charts for my trade entry, but here is my context for the trade: Daily chart: > stochastic shows 3 %K dips below 20, and usually the third one happens as %D starts turning up. Rarely are there more than 3 dips, and you can see the same in Nov-Dec (rectangle). Think of it as a 5-wave move (3 dips, 2 rises) that then > will have to wait for close to see if RSI makes a bullish divergence between today and 21 Jan. Weekly chart: > Though used less often, the 100ma (yellow) provides support for a bounce > Price can move up to 198, and maybe the resistance at 208-210, which matches the daily 20ma
AMEX:IWMLong
by OptionsRising
IWM 31.01.2022 LongAsset and Time frame -IWM Daily Entry Price -195.50 Exit(Stop Loss) 190.14 Exit(Take Profit) -210.22 Technical Analysis Price has reached the -61.8 Fibonacci level and made a small hammer pattern + a small divergence on the daily and a clearer one the 4H chart, also, the price is reacting to the down-trending bottom of the channel, usually, i'll wait for a confirmation candle after the hammer-like pattern, but since we're in a bearish market -there isn't much room to go up and so the trade has to initiated earlier for a closer TP, Good Luck
AMEX:IWMLong
by Avirany
1
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
Small-Caps Lose During Periods of Rate HikesThe Russell 2000 ETF (IWM), comprised of the 2000 smallest companies in the greater Russell 3000, is a proxy for small-cap public companies. Small-caps tend to experience amplified interest expense burden as federal policy rates are lifted (as they are expected to be lifted a whole 100bps through 2022). This is because small-caps have a third of their debt in variable interest rates—meaning as rates rise, the interest expense they pay on debt increases (Source: Bloomberg (below)). The IWM currently sits at a price level of interest to traders around 12/2020 and 1/2021—buyers and sellers fought to push prices beyond ~$192. During this visit to the price level of interest, the Federal Reserve statements of higher future interest rates may act as a catalyst, playing in favor of sellers. Further, as investors' money flies from unprofitable growth companies to stable, profitable growth companies, IWM faces pressure. 31% of the companies making up IWM are unprofitable, compared to only 5.7% of the Russell 1000 (largest 1000 companies). This pair of catalysts may be the breaking point of $192. However, from a historical perspective, it seems that small-caps tend to recover their losses during rising interest rate environments approximately a year after the first hike. Meaning a revisit of the ~$169 price level could be an interesting buying opportunity for long-term traders. More research is needed surrounding the recovery of small caps amid increasing rates. Any ideas or supporting research are welcomed. Thanks. Sources: Bloomberg, WSJ (Unfortunately cannot post links to these articles as a basic member; please message me for the sources).
AMEX:IWM
by acappy99
Swing puts again for IWMI am buying 18Feb puts with IWM over 202. Most volume is at 188 and 195 strikes. I will exit if price gets over 203.50 204.50, 205. Then I will wait and see if IWM moves up to 208-210, or all the way back to daily 20sma, and start a new swing trade. 30m chart shows consolidation wedge, which I am watching for break downwards. Arrows show indicators will move lower again. In strong downtrends, RSI (30m) usually reverses near 60, or in a strong bounce rally it could push up to 65.
AMEX:IWMShort
by OptionsRising
3
Day Trade MechanicsRarely do I post short dated trades, but wanted to provide people some insight into market mechanics. Within a panic selloff with the full support of the fed, (as it stands today) as rule thumb remember efficient market pricing and use it too your benefit. Count on simple indicators and pragmatic decision making while trading small lots in options or tight stops if long outright. Most importantly, stick to your trading system to profit in every market environment. Will update by end of Day. PSA => Fed meeting tomorrow Personal Trading Tip: Don't fight the Fed Long IWM 200 Call 01/28 @ 2.50 Long IWM 200/203 Debit Spread 01/26 @ .99 NOT FINANCIAL ADVICE Best of Luck Traders!
AMEX:IWMLong
by kingmidasLXIX
3
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