IWM: Pivotal Change
Updated
Russell 2000 looks to be on the cusp of breaking down, after a short term distributional channel (following a longer term underperformance). We might get a small bounce back up to the prior support (as backing up action) before continue lower. There is a lack of a volume signature on the bottom of channel indicating no volume absorption like we saw last time (marked in the green box) and this suggests that we will see some acceleration to the downside. The point and figure chart suggests we a price target range of 110-140 signifying an additional 30% drop. This is entirely possible considering the slower growth and further possible war catalysts. While this, might not be the "end" yet - this warrants some portfolio hedging or at least trimming of "high valuation" positions.
Note
After Friday's exorbitant move I am looking for some backing up action to renter the position. Gamma positioning is supposedly super negative (will exacerbate intraday moves) and I think we can see a rally to the support before we sell off again. Looking to buy shorts as we rally higher next couple of days.Note
I'm also seeing diminished liquidity - meaning the moves will move even more.
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