Last Update: 7/6/2017
Since my last update I’ve been talking about the “Neckline” retest (see PART 1), and I think we did see that retest today right on that “Neckline” level at 139ish (above chart was screened during the mid-day). I am still open to a possibility of pullback to 138.40-138.00, and that would still be a constructive bullish move before bouncing back up. However if we do see a follow through to the upside next few days, I think we probably get back up to 141ish pretty quickly here. I did add more Calls at 139.30 during the mid-day today on that “Neckline” retest, so now I am still holding calls (full positions) since 136.53, 138.46, 139.30, & 140.18.
Several things going on here technically: 1. Rising “50EMA” has been acting as support last several sessions here, and today’s gap remains open 2. Last three days we have formed “Morning Star Reversal” bullish formation that requires a confirmation 3. Once it clears well-above the 139.20ish “Breakout Zone,” that Morning Star will be confirmed and the 50EMA will continue to rise showing accumulation. Above “Breakout Zone,” I summon, Russell (IWM) is going to get to new all-time high pretty quickly above 141.40ish. Let’s see how it plays out in the next few days here. I am still holding my Calls since 136.53, 138.46, 139.30, & 140.18.
IWM failed to breakout to the upside above the “Breakout Zone” as I’ve mentioned on my last update; but instead, it broke down seeing pretty significant gap down on last Wednesday. Obviously, as a long-term trader I am not going to panic and start closing my positions with 1-day bearish move. I stayed the course and calmly held my positions. Well, we are pretty much near where the gap-down occurred last Wednesday. Here is the level I am watching, currently the price is staying below the “20EMA” (my 20EMA has been modified: setting at “high“) which is also below the falling resistance. In late April once it broke above the “20EMA.” we saw buyers flock in pushing the price, printing, new ATH; I think we are going to see something similar here if we can get the price to stay above the, currently flat, “20EMA.” I think 139.00ish would be the new breakout zone to watch for the next target of 142ish. I am still calmly holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
Since my last update, it took about a week for IWM to finally break above the “20EMA” and the moving average is now rising, which is a good sign in the minor-term. In late-April, IWM did see price gaping well-above the “20EMA,” but it died out and came all the way back down to 134ish in late May after hitting that 142ish resistance in early May. So, definitely lots of ‘overhead supply’ at 142ish zone, and the bulls want to see this level gets broken to the upside for IWM to really stretch its wings. 138.00 – 137.60ish are the levels to hold should the price pullback this week, but as long as we hold above this now rising “20EMA,” I think bulls are going for that 142 one more time. Let’s see how it plays out this week as I am still calmly holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
Since my last update, IWM pulled back to retest “20EMA” which I was open-minded to that pullback as I talked about the “138-137.60ish” level to hold. It held yesterday and now just kind of holding up here with low volume (suggesting not much sellers) last several days. Obviously bulls would need to bring price back up above 140 for a continuation to the upside as we may have been forming a bull flag pattern last 4 days. Since mid-May we do have cultivation of higher lows and higher highs, so I think today’s move might have been constructive for accumulation next few more days; let’s see if we can see little bit more buying remainder of this week. I am still calmly holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
IWM found a firm support on Tuesday and we are seeing a follow-through move today as IWM closes the day with +1.37% showing relative strength versus SPY +0.05% DIA +0.07% QQQ +0.10%. IWM closed the day above the last Friday’s closing-high of 139.70ish which is good sign in the minor-term trend perspective. So we are back near the ATH vicinity and we are still in this 6-month range, but we’ve built quiet of bullish momentum since the mid-May. I think there is a good chance, this move, might be that move to finally breakout of this range and resume to the upside. Should the price fall back tomorrow or early next week, 139.60 – 139.90ish is the level to hold to keep this minor-term uptrend going while the obvious resistance is 141.80ish. Let’s see if we can finally see a epic breakout and see the small-caps leading the entire market like it did back in 2013. I am still calmly holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18
IWM holding up well here so far as the price is holding above 140.90ish support. Looking at things in the minor-term, looks like we are possibly forming some sort of flag/pennant pattern as it has been consolidating with a tight range last few days. Also we can see that the old resistance is now acting as possible new support (see arrows). So, 140.90ish is the level to hold for minor-term trend to continue higher and breakout of this flag/pennant pattern. If we do lose this level to the downside, 139.90ish is the next level of support to watch. Let’s see how it plays out in the next few days here as the intermediate- and minor-term sentiment is still very much bullish as of today. I am still calmly holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
Well, we couldn’t hold the 140.90ish support, so now we are back at the “20EMA Range” similar to early May when it was retesting 20EMA. Don’t you love this market how it makes your re-live the early-May price-action (when it made volatile-sideways move for two full weeks confusing both bulls and bears trading all around 20EMA) before gaping down hard in mid-May. Subsequently though, price did get back up printing new ATH in mid-June. So here we are retesting 20EMA, and I think, this time, if we do lose this level to the downside, 138.20 – 138.50 could be served as strong support per my Fib. Retracement 50% area analysis. Back in May, Fib 50% was the 20EMA range; today, Fib 50% is not until 138.50ish so I think we got little bit more cushion here should the price continues to slide. If we do see a bounce, 142.00 is next short-term target. I am still calmly holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
IWM is currently finding support right on that 20EMA last few trading sessions, also looks like it is coming out of this bull flag pattern. As long as the price stays above this rising 20EMA, I think bulls are going to retest the highs (142.30ish) again. Keep in mind there is a gap at 141-142 that needs to be filled and overcome in the coming week. Let’s see if we can able to see a follow through to the upside this coming week as I am still holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
20EMA has been a key moving average as I’ve been noting it last few updates. Well, here we are again, even with a sell-off event yesterday, 20EMA held and bounced today with a gap-up open today; and that gap remains open at the close while 20EMA continues to curl up. With a strong close today, as long as the price stays above the rising 20EMA and we keep that gap (from this morning) open, I believe the trend will continue higher. Obvious resistance at 142.50ish, which we probably hit tomorrow. My weekly and monthly charts are really anticipating a breakout to the upside, let’s see how it plays out remainder of this week. I am still holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
Small-Caps (Russell) are in the verge of a big breakout to the upside as the the price-action is tightening up here in the last several weeks (inside of this ascending triangle pattern). Russell did see some relative strength vs S&P 500 on Monday and pretty much all last week. Tech (QQQ) has been selling off while the Banks (XLF) has been rallying with Large-Caps (SPY) in a neutral sentiment. So, the money rotation is occurring out of Tech towards the Banks and possibly into the Small-Caps (IWM). This is how the market is going to keep the market to float up . Small-Caps has been a lag-er for over 6-months, and I believe it’s about time for Small-Caps to lead the entire market as they often do in a strong bull market. If the price declines next few days, we want to see price-action to stay above the rising-uptrend support line, and as long as we do that, I think the breakout will occur. I am still holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.
Small-caps sees a sizable gap down today, and that gap will make things hectic here for the buyers probably for another few weeks. Price is back down near the “50EMA” (blue box on the right), which, this same moving average act as strong support back in early June (blue box on the left). 138ish price is where 50% retracement (fib analysis) and the previous resistance (highlighted) is colliding, not to mention “50EMA” is residing in that vicinity as well; it means it’s a potential level for a strong support. For minor-term buyers to regain control, price must get back above 142. Often times this is what it takes to be a true position trader to hold through the sideways-consolidation phase to be able to catch the big move like my recent position on Citi Group (C). I am still holding all of my CALLS since 136.53, 138.46, 139.30, & 140.18.