In this video, Steve highlights a pattern that led to an outsized move in IWM and how you can identify this pattern.
View Video TranscriptIWM we took a look at it over the
weekend the charts starting to actually
look a little bit better to me we’re
showing relative strength in the last
few weeks versus the spies now remember
the small caps got crushed on the way
down much more than the large caps
I think the spy is that the low was down
low 30s small caps were down mid 40s
percenter percentages from the high and
so really got crushed and then over the
weekend a friend of mine actually sent
me an interesting note or just a short
clip basically said that on earnings
revisions in IWM we’re down actually 45
percent or over 40 percent I remember
the exact number but technology
revisions were only down 5% and that’s
obviously explains the strength in the
technology sector and so you’ve now got
people thinking oK we’ve had this huge
rally and technology the spies are you
know not down much anymore you’re
hearing like the big banks and some of
these large hedge fund people saying the
risk reward isn’t good in the market
when they talk about the market they
mean the S&P
and so you know people are thinking why
don’t we take a look at the small caps
and so in the morning meeting we put it
on the game plan sheet for the first
time in a few weeks and I discussed two
patterns we take a look at the clip I
talked about possible patterns the
reason why we’re talking about possible
patterns is you want to be ready to go
as the pattern unfolds when the after
the market opens to be ready to act and
not be thinking on the fly oh it’s down
should I buy it’s up should I buy what
are the possible patterns think it out
in advance develop a game plan how to
play that pattern and take advantage in
the pre-market we were seeing the
relative strengths I mean I’d be averse
despised I think it was up about 70 more
basis points maybe it was like 1% versus
1.7 if you look at it now take a look at
this chart it’s a 300 basis points so it
even though it was already up more than
the Spy’s in the pre-market by 70 basis
points seven tenth of one percent now
it’s outperforming by 300 basis points
three percent that’s a huge move anyway
check out the clip and hopefully this
gives you an idea of kind of our
preparation process and how we kind of
identify things in advance kind of game
plan out what might happen so we’re
ready to act when the market opens
before we get started we have a two hour
free workshop where I spent 30 minutes
going through our proprietary stock
selection process where I identify the
lowest risk highest reward stocks each
day and we also go through three top
trading setups that we use on our
trading desk in New York City if you’re
interested in that to our free workshop
click on the link above or go to trading
workshop comm and check it out iw am
showing relative strength of the spies
so if we just take it from in terms of
you know weird IWM rally to back on the
ninth
you’ve got to 124 60 it’s there so this
is trying on a relative basis showing
strength even the day of the the guild
news day this was 120 360 at the at the
after-hours high so it’s it’s it’s at
higher levels than where it was then the
spy was recently so even though from a
bigger picture of multi month last 12
months situation the IWM is much weaker
than this by
it’s now starting to show signs of
relative strength here if we look at the
the uptrend channel it’s it’s moved up
into the 130s so you know you get a
close above 126 they might try to just
push it to like 130 of by tomorrow even
it’s just not that liquid and so we’ll
see let me just zoom in on the last PDA
is just a skinny sense of what it’s
Belen so I had this move from one
sixteenth one point that was the guild
Day After Hours and since then it really
hasn’t had I guess this was pretty good
122 122 that was a $2.00 drive so it’s
not a bunch of $2.00 drives you can see
them pretty like here was one here was
one end of the day after noon on Friday
there’s almost three so it’s something
like these that it has these big up days
like these for $5 you get the quick like
really strong pop it’ll pull in and it
takes out the morning high and then it
just it just goes it’s about an 80 cent
range here in the pre-market let’s say
125 on the open comes in they flush it
holes and starts to hold bag above 124
and I would be thinking something like
that the other out possibilities it just
it goes above 125 doesn’t really pull
back that much and then goes goes from
there so I just just be mentally like
ready for this because of the relative
strength that are trailing obviously
already up 1.7 percent the pre-market
it’s a lot versus the spire which is 1%
