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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.

This entry was posted on Tuesday, April 28th, 2009 at 5:28 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

9 Responses to “IWM Ascending Triangle”

  1. Yerk says:
    April 28, 2009 at 5:35 pm

    interesting observation – inverted h&s completed then?

  2. admin says:
    April 28, 2009 at 5:46 pm

    Which H&S?

  3. Yerk says:
    April 28, 2009 at 6:04 pm

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

  4. admin says:
    April 28, 2009 at 6:05 pm

    David Tice sez to sell before the SPX gets chopped in half.

  5. admin says:
    April 28, 2009 at 6:18 pm

    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

  6. admin says:
    April 28, 2009 at 7:01 pm

    Jim,

    You might be interested in this UNG article:

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

    Matt

  7. Randall says:
    April 28, 2009 at 9:49 pm

    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

  8. Yerk says:
    April 29, 2009 at 5:36 am

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

  9. darren says:
    April 29, 2009 at 7:45 am

    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 !