Wednesday, September 17, 2008

A Look At The QQQQs and the IWMs

This is a chart of the IWMS -- the ETF that tracks the Russell 2000. It's a great proxy for the market's risk appetite in equities. This is a multi-year chart in weekly increments. Notice the following:

-- Prices clearly broke their multi-year uptrend that started in 2004

-- Prices have revolved around the 200 week SMA since the beginning of this year. However, prices are now below the 200 week SMA

-- Prices have bounced off the 38.2% Fibonacci level several times over the last year.

-- The weekly SMA picture is cloudy. They are bunched together with the averages within a few points of each other and the SMAs moving in different directions

This is a multi-year chart in weekly increments

Notice the following:

-- There are three primary trend lines. The QQQQs have broken through two: the upper trend line of the multi-year trading channel and the upward sloping trend line that started in mid-2006

-- Prices are now heading for the lower trend line of the multi-year upward sloping channel

-- Prices have just moved below the 200 day SMA.