Anticipating IWM's Turns - Market Analysis for Jan 16th, 2021
by Mike Paulenoff
January 16, 2021 • 12:26 PM EST
Last Wednesday afternoon (Jan 13), with the IWM at 210.76, Mike Paulenoff told MPTrader members:
"The Russell 2000 Small Cap ETF is just about 0.5% off of its all time high. As long as any weakness is contained above 204.30, my near-term pattern set up from the 1/04 pullback low at 190.94 is poised for still higher ATHs above 211.73."
The IWM reached a high of 215 the very next day.
Meanwhile, Mike had also cautioned: "Juxtaposed against the above-mentioned constructive near-term pattern set up is a glaring negative Momentum Divergence (11/09 and 1/07), that provides us with an anecdotal warning signal that strength is on borrowed time, nearing exhaustion. Take the signal for what it's worth-- a warning, until the music stops in IWM."
In fact, on Friday, with IWM at 211.27, he wrote: "All eyes on 209.20 nearest support in IWM, which, if violated and sustained, will trigger an initial sell signal."
IWM pressed to a low at 208.26, triggering that preliminary sell signal.
What's next for IWM? Friday's move is certainly a warning signal that IWM is vulnerable to a meaningful correction after climbing 48% from its 9/24 pivot low, far outpacing the 22% gain for QQQ, and the 19% gain in SPY during the same time period. The Small Cap Index has a habit of leading into BOTH directions, which is precisely why Mike is closely tracking its set up for MPTrader members.
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The TLT put in a big upside reversal day yesterday (6/16/22) from 107.80 to 111.72, closing RIGHT AT the High of 111.72, leaving behind a Bullish Engulfing Candle on my Daily Chart (not shown here). The last time TLT traded at 107.
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