Some updates on the broad market, which I noted had begun a possible bottoming process yesterday:
I’m watching IWV for a tradable signal, since its fulcrum bottom is a higher probability pattern than the diamond bottom in SPY. Here are the tradable signals I’m awaiting before adding to equity exposures, either:
- $IWV 15min fulcrum bottom breakout now > $115 right shoulder resistance
- $IWV 15min fulcrum bottom holds neckline support @ $114
What ended-up happening was more akin to the latter. IWV curled lower in the afternoon yesterday, holding that $114 neckline support until collapsing beneath into the close. Despite futures ($ES_F) printing -75bps through much of the overnight session, we opened today higher, dubbing yesterday’s close a bear trap.
Technically, IWV’s 15-min fulcrum bottom is still en force, but it has also morphed into a falling wedge (as has SPY’s diamond bottom) with 3x bull divergence. Both patterns are relevant here, but I’ve turned my attention to the falling wedge in the immediate term, because it’s a high probability setup on the verge of breakout with the 1min @ $114.2 trendline resistance now. Redoubling my confidence in this setup, IWV’s daily LT bull channel is holding trendline support right here too.
I’m awaiting confirmation of a sustainable breakout before adding equity exposure. That confirmation should come from the following sequence:
- $IWV 15min falling wedge breakout w $115 target, then
- $IWV breakout > $115 (falling wedge target & fulcrum bottom right shoulder)
It’s generally difficult and dangerous to time the breakout of a falling wedge pattern, but IWV’s current structure has wound tightly into a vertex, suggesting that at least a ST breakout is neigh.