Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Mid-Caps & Transportation Show Upside Targets For Next Stock Market Rally

Stock-Markets / Stock Market 2021 Feb 08, 2021 - 02:34 PM GMT

By: Chris_Vermeulen

Stock-Markets

An important technical conclusion stemming from the recent volatility spike is that prices must continue to push higher, above previous highs, in order to confirm the continued upside price expectations. The recent volatility spike and downside rotation in the US major stock market were big enough to reset many trending systems and prompt new upside price targets.  In this research article, I will share our targets on the Mid-Caps and the Transportation ETFs to show you want we expect from the potential rally.

IWM Breakout Above $218.35 Suggests Rally Is Just Starting

The IWM, the Ishares Russell 2000 ETF, Daily chart highlights the recent rotation in price and shows a Fibonacci price extension range from the late December 2020 lows to the recent late January 2021 highs.  I use these Fibonacci price extensions as a means of measuring potential upside or downside price targets, which seem to be fairly accurate.  Watching what happens near the 61.8% level on the chart will guide us in determining if the 100% target level will be reached quickly or after a bit of consolidation.


For example, the upside 61.8% target on this IWM chart is $221.71.  Once price breaches this level by rallying higher, and if price rallies through this level strongly, then we would expect the rally to continue towards the 100% target level.  If price rallies up to the 61.8% level and stalls or pulls away from that level then we would expect price to continue to stall in an attempt to build a new momentum base before possibly rallying higher towards the 100% level at some point in the future.

Therefore, there are really three critical levels on this chart, the late January previous highs, near $218.35 (which have been breached today), $221.71 (the 61.8% Fibonacci target level), and $232.16 (the 100% Fibonacci target level).  The current breakout above the $218.35 level suggests this new upside price rally has enough momentum to continue higher and attempt to target the $221.71 level.  This is technical confirmation of the bullish trend and puts the upside price targets clearly in play.

Transports Show Upside Targets Hinge On The $232.90 Level

The IYT, IShares Transportation Average ETF, Daily chart below shows the recent bottom and upside price rally has yet to breach the recent January 2021 highs, near $232.90.  As we saw the Russell 2000 (IWM) chart, above, has already broken recent highs, it is important that we see the IYT also break through recent highs to confirm the strength and  momentum of this trend.

Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!

At this point we expect the IYT to continue to push higher, targeting the $232.90 level, attempt to break above this level, then begin to move higher targeting the $237.27 (61.8% Fibonacci target level) and then $252.32 (100% Fibonacci target level).

The deeper downside rotation in this IYT chart shows how strong the Mid-Cap sector is compared to the Transportation sector.  Mid-Caps and Small-Caps are really seeing a very strong momentum move while the Transportation sector has a much bigger range to recover and break above.  It is not that we don’t believe the Transportation sector won’t rally higher, it just highlights the focus of traders is in the Mid-Caps and Small-Caps at this stage of the rally.

As traders begin to realize the upward price potential as they watch this rally momentum build, we believe a shift in thinking will take place.  Once multiple sector averages break above recent highs and the Transportation Average breaks higher, then a broad sector confirmation of this renewed rally phase will drive traders back into the markets. As some sectors fail, others will begin to trend higher.  We watch these sectors to determine what are the best sectors to trade based on relative strength and momentum and then trade their respective ETFs. I call this my Best Asset Now, or BAN, strategy.

My subscribers and I are loving the strategy – we took out three ETF trades in the three hottest sectors and one Index trade and all are moving up nicely after only 2.5 days. We hit our 7%, 15%, and 20% targets for one of our trades within 48 hours, and continue to ride the remainder of our position in that trade up until we are stopped out! This is how we make money while still getting that awesome, excitable feeling from being in an explosive, possibly parabolic, trade!!

Don’t miss the opportunities in the broad market sectors over the next 6+ months, which will be an incredible year for traders of the BAN strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. As some sectors fail, others will begin to trend higher.  Learn how BAN Trader Pro can help you spot the best trade setups; staying ahead of sector trends is going to be key to success in these markets. 

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you. In addition to trade alerts that can be entered into at the end of the day or the following morning, subscribers also receive a 7-10 minute video every morning that walks you through the charts of all the major asset classes. For traders that want more trading than our 20-25 alerts per year, we provide our BAN Trader Pro subscribers with our BAN Hotlist of ETFs that is updated each day. We issued a new trade alert for our subscribers today and all four trades are well on their way to great returns!

Have a great weekend!

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in