IWM — checkmate (but crank up Dark Side of the Moon and a glass of wine before reading)
so, in October of 2013 (yes, more than a year ago) I was beating the drum of a very important top forthcoming top/target zone in the IWM. (An ETF of the Russel 2000.) See below the double line area …
The zone depicted from that post in October 2013 is below and , yes, the IWM respected the zone and corrected roughly 12-15%. A “decent” correction so to speak.
so, as of today, as the DOW and S&P recorded new intraday highs, the Russell (and, OBTW, the big daddy $NYA) are stuck at the.786 retracement.
Folks, clear and simple … we are at checkmate w/ regard to the stocks. I’m biased that “the band plays on” and we climb the deflationary ladder of chaos for, perhaps, another year OR we stop in/around here (next week perhaps) and start down w/ a really good and scary shakedown.
but before we try to “guess” what is going to happen next … go put some Pink Floyd on Google Play, pour a glass of wine and just walk w/ me down the musical component of the stock market … don’t try to figure out the WHY or the WHAT and,well, completely throw this away as bullshit if you want.
I don’t care … but the bottom line is the ENTIRE THING HAS BEEN FUCKING PERFECT in regards to the world of music. Bada Bing Bong Boom ….
SQUARE ROOTS RUN EVERYTHING:
.786 … just a number
but one of the most important retracement numbers out there. and, contrary to what people say , IT IS NOT A FIBONACCI NUMBER!
it does derive from 1.618 (which is the golden mean) but here’s the deal … it’s a musical derivation of the Fibonacci based golden mean…why you might ask?
square root = 1.27
1/1.27 = .786.
the frequency of a string is INVERSELY PROPORTIONAL to the SQUARE ROOT OF its weight (length)
additionally, the frequency is DIRECTLY PROPORTIONAL to the SQUARE ROOT of its tension ….
SQUARE ROOTS AND THEIR INVERSES FOLKS !!!!!
so as we look at the TOP in IWM … 121 (hello a NATURAL SQUARE 11*11 = 121) we can see WHY the puppy stopped in/around 104. TILT — HUGH?
121 square root = 11.
11-.786 = 10.214
10.214^2 = 104.32 (PLEASE LOOK AT THE CHART BELOW AND NOTICE THE CLOSES AND OPENS DENOTED BY THE LIGHT BLUE LINE) – THAT LINE IS DRAWN AT 104.
OK Bart … that’s kind of cool. But, for one moment don’t even tell me that it was a 104 calendar day correction from the high at 121….!
- all time high 07/01/2014
- add 104 calendar days: 10/13/2014 – please see the chart.
- folks, that was the EXACT close and the OFF THE IWM went …
so, what the heck does all this mean … as my wife likes to tell me — give me the CLIFF NOTES.
1. this ZONE depicted is a MAJOR pattern from the all time low.
2. the .786 retracement from the 121 high has held the market from going higher
- if we lose this thing to the upside THEN it could cook off in a sling shot parabolic move ..
3. the MATH shown is simply to show that, well, it was PERFECT in PRICE and TIME and therefore the subsequent move up was 1) expected and 2) makes sense.
4. IF LONG – in the context of this amazing run in the Russell 2000 – I would just simply hold it and roll w/ it .. HOWEVER if we break that 104 level then cut it and bail.
5. If SHORT – then watch for a WEEKLY (tomorrow) close above the .786 and if you get a graceful exit on Sunday Night/Monday morning get ready to cut it and get long for a good year or so as this puppy launches.
Last thing … I HAVE NO IDEA WHICH SCENARIO WILL PLAY OUT ….
email me if you have any questions …
I just want to make sure you, my bad ass readers, have a clue as what I’m trying to convey.
At a minimum, you can tell your significant other to leave you alone, put some Pink Floyd on and enjoy a glass of wine w/ some square root stuff ….
measured moves are powerful tools and on long term charts they are very useful for forecasting price moves. take a look at the chart below … the BLUE arrows are the lengths of the bull moves in the IWM. appears the current move will converge nicely in/around 113-114. Then, since we are all working w/ probabilities, what do you think the probability is that we find stiff/major/topping (?) resistance in around that area…? if that doesn’t stop it then watch 120-121 … either way we have the POTENTIAL for, at a minimum a 6th month correction?
last thing is some very easy time study … note the TIME it took for the first blue arrow to go up…now look at the TIME of this move that began at 34.
we have a convergence of PRICE and TIME in and around here … just saying.