From member @teeps01 in the trading room:
Hi Randy, I have a rut short & it appears to me that there’s +ve divergence on the 4 hour chart with two roughly equal lows today & last week. Could you post an update own chart please as away from pc. Have you reversed here or adding to shorts? Thanks
My reply:
I’ll post an update on IWM on the front page, tagging you so you’ll receive a notification. I see the divergence that you are referring to on the 4-hour charts as well as the 60-minute but the recent big negative divergence on the more significant time frame takes precedence & doesn’t appear to have fully played out yet IMO. As such, I’m willing to ride out any counter-trend rallies on my core short positions, which includes the $RUT.
Maybe those intraday period divergences play out but if the market is still in the early stages of a much deeper correction, than one would expect that any bullish divergences & chart patterns will have an increase rate of failure.
Yes, added to my index shorts on gap back-fill today. (end reply)
Here’s my 2-year chart chart of IWM (Russell 2000 Index Tracking ETF) which shows a clear pattern of divergent lows, followed by rallies, & divergent highs, including the most recent one, followed by corrections. From the scope of the recent negative divergences and many other factors taken into account such as the current trend indicators on IWM bearish on all but my longest time frames, it appears to me that IWM is more likely in the early stages of a much deeper correction that kicked off following the March 1st highs than the final stages of a mild pullback on the road to new highs.
IWM daily March 27th
The bottom of the sideways trading range since early December, which comes in around 133.45, appears to be a critical support level on IWM. A solid close below that level, particularly if/when confirmed with breaks of key support levels on both SPY & QQQ, will most likely spark the next thrust down in IWM towards my current target of approximately 125.66.