While DIA is making new highs, I thought I'd look at IWM to see how the small cap stocks are faring.
Standard TA shows a potential bull flag well underway here. Meanwhile a possible EW count that fits with that bull scenario shows a subwave 4 of 3.
The main problems I see with the bull thesis, as far as IWM is concerned, are two-fold:
1. The 2 main waves up are roughly equivalent, which points more toward an ABC corrective formation, rather than an impulse wave.
2. As a general guideline, a 3rd wave (and especially a 3rd of an extended 3rd wave) should carry the highest momentum. Here momentum is roughly equivalent.
So is it possible IWM is playing catch-up here? Certainly. I wish there were more evidence to convince me one way or the other. For now, I'm forced to watch to see what the next move is. A convincing break lower will push me more toward the ABC corrective scenario(116 will confirm it), while a new high will push me toward the wave count pictured here.
We could be looking at 0 new highs, 1 new high, or 2 new highs (pictured here), depending on the pattern being a completed C, a 3 of C, or a 3 of 5. With that much uncertainty, it's better to give the market the opportunity to show its hand.
Standard TA shows a potential bull flag well underway here. Meanwhile a possible EW count that fits with that bull scenario shows a subwave 4 of 3.
The main problems I see with the bull thesis, as far as IWM is concerned, are two-fold:
1. The 2 main waves up are roughly equivalent, which points more toward an ABC corrective formation, rather than an impulse wave.
2. As a general guideline, a 3rd wave (and especially a 3rd of an extended 3rd wave) should carry the highest momentum. Here momentum is roughly equivalent.
So is it possible IWM is playing catch-up here? Certainly. I wish there were more evidence to convince me one way or the other. For now, I'm forced to watch to see what the next move is. A convincing break lower will push me more toward the ABC corrective scenario(116 will confirm it), while a new high will push me toward the wave count pictured here.
We could be looking at 0 new highs, 1 new high, or 2 new highs (pictured here), depending on the pattern being a completed C, a 3 of C, or a 3 of 5. With that much uncertainty, it's better to give the market the opportunity to show its hand.
In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there's nothing more for you to do. - William Eckhardt