IWM Ascending Triangle

The IWM has a bullish ascending triangle on its daily chart (click to enlarge):

iwm-triangle

The red lines outline the triangle. The lower red line extends farther back, so it has a good deal of importance beyond the triangle. The blue line marked “L1″ gives the height of the triangle, and a breakout would project the same length shown by line “L2″.

From L2, follow the purple line to the left and you will see that a breakout would measure to the January peak marked by the purple arrow. So, if the IWM can break above the 48.25 area, it may have another 8%, or so, to run.

The IWM has outperformed SPY and QQQQ during this rally, and it represents 2,000 small-cap stocks, so it is important to watch. Also, even though many bears are calling this “The Crap Rally”, the fact that small-caps are leading doesn’t really tell us anything.

QQQQ has a similar pattern to the IWM, though it may be degrading. And since the XLF topped back on the 17th, and SPY is still conforming to its bearish rounding-top pattern, I wouldn’t be surprised to see the IWM “round over” also. Nevertheless, if it breaks out, you definitely don’t want to be in the way.

9 Responses to “IWM Ascending Triangle”

  1. Yerk says:

    interesting observation – inverted h&s completed then?

  2. admin says:

    Which H&S?

  3. Yerk says:

    on the IWM – wouldn’t it look like one? Neckline L2 target

  4. admin says:

    Yerk,

    OK, I see what you mean. Well, if the past several trading days has created a right shoulder, and the top red line on the chart becomes a neckline, the IWM could be forming a giant H&S that would measure all the way up to fill the gap left on October 3rd.

    Matt

  5. admin says:

    Jim,

    You might be interested in this UNG article:

    http://sentimentrader.blogspot.com/2009/04/slow-leak-in-gas.html

    Matt

  6. Randall says:

    S. FL real estate: sales way up, prices way down, funny how that works:

    http://www.sun-sentinel.com/business/sfl-housing-prices-florida-c042309,0,4502639.story

  7. Yerk says:

    dax broke above 4650 – that’s bullish. Potentially we’re going to see new highs now. Bears sick with bear flu.

  8. darren says:

    FTSE still bullish on the 60min and on the daily it’s broken above it’s early April high this week. British bears gone into hiding !