Just a quick observation, this is a weekly chart of IWM. Notice every time since June of 03 that IWM tested its 20 week m.a. (which is the blue line) a break of the 20 week was imminent and the target was the 50 and 70 week m.a's. Which then led to new highs. Which will lead to a test of the 20 week again and then a break of the 20 week down to the 50 and 70 week m.a.'s. and then new highs, etc. That is the rhythm of IWM. Then notice how the 50 and 70 week became downward sloping in January 08, then it became resistance and the place to short. Signalling the time to buy was done and shorting was the profitable trend.
Furthermore notice each test of the 20 week, MACD had crossed over down and the bounce off that test either made nominal new highs or fell short, which in turn gave way to further down side testing. Also of note is how MACD reset itself at much lower levels from where the test of the 20 week occured. Only once marked with the x in the price and MACD pane did the test not give way to price testing out the 50 & 70 week m.a.'s. Notice the difference MACD never crossed over down!
Fast forward to the current day and notice the set up occurring. Looks like the same pattern is still holding true. I am looking for a few days above the 50d s.m.a to start getting short. I think $60.50 and higher is a prime place for shorting. I will wait for $53-$54 to cover, which is where the 50 week should have risen to.
I must also say, notice how the 50 week turned up in June of 03. I think that is the easiest way to spot the trend, it was clearly up and bought every time it hit that price. Currently the 50 week has just turned up and in my mind is signalling the start of a new up trend and when it does get tested it should be bought. In my mind I will keep applying this analysis in my trading until it ceases to work, but is has been working since 03 so why fight it.
For clarification the grey line is the 50 week and the red line is the 70 week. I use the 70 week for further indication of the trend. As you can see in the chart its been very reliable.
