Small IWM analysis

[Rembert]

Made a small IWM analysis. It's stating the obvious, tought I'd share it anyway.

On the daily chart we can see a bounce from the VWAP anchored at the start of the september rally. From this strong bounce we can see on the hourly chart that IWM made it to a 61,8% Fibonacci retracement level before continuing the rally. VWAP and other support levels like pivots were broken in the process sucking people into selling their positions or going short. This now appears to have been a bear trap as IWM has regained it's uptrend and is now trading above a very strong VWAP support cluster ranging from about 83.34 to 82.60.

[nickola.pazderic]

...as chief cheerleader, I say thanks! (are their cheerleaders in Europe?)

[Rembert]

are their cheerleaders in Europe?

Forum policy does not allow me to answer your question ;)

[bh_trade]

Please dont take this the wrong way, but isn't that chart a bit like searching for the perfect moving average that caught the recent swing low? I would think the midas curve is much more meaningful coming from a swing low vs a random fom date

[Rembert]

Please dont take this the wrong way, but isn't that chart a bit like searching for the perfect moving average that caught the recent swing low? I would think the midas curve is much more meaningful coming from a swing low vs a random fom date

First of all, I'm no MIDAS specialist, I just like to draw a buch of colorful lines that seem right to me. So maybe a MIDAS expert here can give a tutorial on how to properly use MIDAS.

You're right in that the MIDAS line on the daily chart seems to fit a little too perfect and that it's easy in hindsight to put it there. But it is not a random day I started from, that is the day the market had a gap up and started a mayor uptrend. Now, no one in their right mind would just blindly buy IWM because it touches that line. But it is usefull to look at those points as potential area's where support for a stock/ETF could be found.

Usually I draw a bunch of MIDAS lines starting at the recent low before a base or consolidation break out and then on each pullback. Like here with VMW, I bought it on 104 after it bounced on VWAP support after it filled the earnings gap up. If it can't hold those support lines and breaks the 100 level then I'm out.

[EB]

You're right in that the MIDAS line on the daily chart seems to fit a little too perfect and that it's easy in hindsight to put it there. But it is not a random day I started from, that is the day the market had a gap up and started a mayor uptrend.

Rembert, this is perfectly in line with Levine's premise of looking for a psychological inflection point, which might be at an actual low, or the first big gap up, which might also be an IBD follow through day.

David Hawkins will adjust with some hindsight the launch date after the first pullback to the MIDAS curve vicinity, under the assumption that the next pullback will more closely respect the MIDAS curve.

Regarding the multiple support and resistance curves, they can easily clutter a chart. Once a support is broken, for instance, I leave it to see if it turns into resistance. However, if it looks like price is not respecting it, I simply remove it at that point.

[Rembert]

Thanks Bob. I'll have to check out the MIDAS book sooner or later.