The market leading Russell 2000 small cap index is being lifted from below by a rising 50 dma (intermediate term trend) and rejected from above by the falling 200 dma (long term trend) whilst the Bollinger Bands squeeze prices even tighter. This compression of volatility can also be seen in the collapsing volatility index ($VIX) and often suggests a big move or "volatile" behavior may be approaching. I would use $46 below and $52 above on IWM to signal a breakout. Should IWM move out of this range the price targets would be imense. On the upside I get $51 + $17 = $68 (which is reasonable because its near the previous neckline) where $17 is the 2009 highs minus the 2009 lows. Below I'd target the lows at $34. If IWM closes outside this range (46-52), I will look for volume to break its downtrend as confirmation.Disclosure: I have a small IWM put position.
No comments:
Post a Comment