IWM trade ideas
Bearish Reversal open today - maybe more selling before buyingI have been watching IWM and XBI for weakness or strength as general market indicators. Today's open was below Friday's open, which is very bearish. Same is true for AAPL. XBI tried to rise and failed.
Overall, many tickers have completed a "cup" formation and are extended from their daily MA's while indicators are extremely overbought. Hence a pullback to form a "handle" makes sense.
Beyond the next few days, I am aware of various expert views of the next market direction. I am staying open to possibilities until I feel more confident in my own studies.
Closed (IRA): IWM September 16th 157 Short Put... for a .76 debit.
Comments: In for a 1.66 credit (See Post Below); out here at >50% max; .90 ($90) profit.
IWM - Key support is holding
Looking at Russell´s weekly chart, we can see that a MAJOR confluence in the 170 region held nicely. This confluence includes:
- 2018 and 2020 highs
- 161.,8% A-B extension
- 50% pullback from 2020 low to 2021 high.
A break of the green downtrend line would give us a better indication that a recovery is in place. In this scenario my first target is 209 resistance.
This scenario invalidates at 162.78.
IWM - Next Leg DownI started a hedge position by buying Sept 16 178 PUTS on July 21 st. I legged into the contracts throughout the day. Average cost 7.01
This was my first buy zone indicated by the first box. I might add a couple of contracts if it wedges up to the second green box, near the 184ish range.
IWM looks to be repeating the same flag pattern it did before, indicated by the pink lines.
Markets are still in a downward trend, making lower lows and lower highs, as indicated by the orange channel.
Recent rally has been on declining volume.
Profit takers are indicated by the blue lines.
RSI near 60, which marked short-term tops.
Closed (IRA): IWM September 16th 140 Short Put... for a .39 debit.
Comments: Opened this for 1.68. (See Post Below). Out today at greater than 50% max. 1.29 ($129) profit.
Opened (IRA): IWM September 16th 157 Short Put... for a 1.66 credit.
Comments: Targeting the <16 strike in the shortest duration that is paying around 1% of the strike price in credit in this weakness and comparatively higher IV.
This is more of a trade to add back in shorter duration long delta that I stripped off -- since I still have a high short delta IWM long put diagonal on -- than a "this is a perfect spot to sell a put" sort of trade.
Russell 2000 (IWM) Stalling at ResistanceThe major US indices are stalling today at major resistance levels. The Russell 2000 (IWM; see also RTY CME Futures) has reversed right at a Fibonacci cluster (shown by the blue circle) that coincides with a 7 month downtrend line that has remained valid since November 8, 2021.
RSI is confirming a likely reversal. RSI has reversed right where RSI peaked at the end of the powerful 2H March 2022 rally. The arrows indicate the current RSI peak for Russell 2000 as compared to the prior peak on March 29, 2022.
Given short-term momentum having turned bullish after the recent multi-day rally, this is a countertrend fade idea for the short-term trend, i.e., the trend over the past 7-10 trading sessions. However, this bearish view is a trend-based view that remains consistent with the longer-term downtrend that has persisted since November 8, 2022.
Near-term targets lie at 177 and 175 USD on IWM, the ETF that tracks the Russell 2000 .
DISCLAIMER: This idea is solely for educational / entertainment purposes and does not constitute financial advice or an investment recommendation and cannot account for any person's particular financial circumstances. The author would never want other investors / traders to lose money by relying *solely* on this idea rather than doing their own due diligence. Before entering any trade, please evaluate the risks of (i) the instrument / security being traded, (ii) the type of trade and its timeframe, (iii) risks inherent in that type of trade and its time frame, (iv) the inherent risks of shorting securities (presenting unlimited risk without hard stops in place), (v) the inherent risks of trading options, leveraged ETFs, and cryptocurrencies, and (vi) all financial risks arising each person's personal financial circumstances.
AMEX:IWM
BMV:IWM
TVC:RUT
CME_MINI:RTY1!
RUSSELL:RUT
Closed (IRA): IWM August 26th 155 Short Put... for a .55 debit.
Comments: Collected a total of 5.04 in credits with rolls. (See Post Below). Closing out here results in total realized gains of 4.49 ($449). This leaves me with one IWM "rung" on after all the shenanigans -- the September 16th 140. Will look to re-up on weakness/pop in IV such that the <16 delta 45 DTE short put is back is paying >1% of the strike price in credit.
IWM RedistributionHey all, I wanted to share the fact that IWM literally looks 1 for 1 with its March setup before the rally eventually faded and it made its next leg lower. I've been comparing this rally to March- even prior to the rally actualizing this week- and IWM is likely setting up in virtually the same way before its next leg lower. I think the market will be higher next week, but this could easily present a solid shorting opportunity. My predicted move is drawn out.
Closed (IRA): IWM August 26th 150 Short Put... for a .46 debit.
Comments: Opened this on the 12th of July for a 1.54 credit. (See Post Below). Closing out here after 9 days in the trade at >50% max with 36 days to go. 1.08 ($108) profit.
IWM: 3Bar Play PotentialIWM: 3Bar Play Watch on Daily timeframe
-Supporting evidence for risk on scenario
-Double Bottom
-MACD breached 0 line with
upward slope & ascending positive
histogram
-Potential to complete gap fill to 184.06
if it doesn't consolidate or reject.
- POC of VPVR on retested and break above
-Rejection of KL 181.75 sees KL back to
178.49, 175.38
-Bias: Neutral to Bullish
-ATR: 4.45, Beta 1.01, IV 31.17%
Closed (IRA): IWM August 19th 156 Short Put... for a .58 debit.
Comments: Opened this for a 1.56 credit. (See Post Below). Closed it out today at >50% max to dry out powder for "the next one." .98 ($98) profit.
Closed (IRA): IWM August 19th 150 Short Put... for a .46 debit.
Comments: Filled for a 1.57 credit (See Post Below); out today for .46; 1.11 ($111) profit.
Short IWM (RUT) at 173.10, PT at 156.10AMEX:IWM CME_MINI:RTY1! TVC:RUT RUSSELL:RUT
Hypothetical Trade Summary : Shorting AMEX:IWM (Russell 2000) here at 173.10. Price target at 156.10. Stop = 178.10. Capital risk = $3,000 (3% of a $100K trading account). Maximum profit = $10,200. Reward to Risk: 3.4 / 1
Rather than a legitimate rally based on an intermediate-term trend reversal, today's short squeeze appears to be about dealers and market makers (MM) unwinding hedges from a substantial OpEx puts expiring this Friday, June 15, 2022. (Unwinding hedges means dealers / MM's buying to cover short securities / futures / equities used to hedge short put positions from puts sold to traders and institutions that expired today, monthly options expiration.) IWM, an index ETF that tracks the Russell 2000, is stalling at its 21-day EMA. Moreover, the overall structure of the rally the past several days appears to be an Elliott Wave (EW) triangle pattern in most major US indices.
In EW theory, a triangle pattern is considered a corrective pattern. It tends to resolve in the direction of the larger trend, which remains downward in this case.
The Elliott Wave rules / guidance explains that "at least two of the alternate waves are typically related to each other by .618 . Assuming a triangle pattern here for the corrective bounce off mid-June 2022 lows, at least two or more of a triangle's alternating waves have Fibonacci relationships of .618.
In the chart below, the most recent bounce into today (the rally starting from the June 14 low at 167.02) is viewed as a wave E of the triangle pattern.
Applying this Fibonacci and EW guidance, one should multiply wave C's length by .618 (wave C x .618) and then project this length from the start of wave E off yesterday's lows.
This Fibonacci relationship has been applied to wave C and E, which are considered alternating waves, in the chart below.
Interestingly, the .618 relationship results in a possible end point for wave E at the .618 level where wave E = .618 x wave C. This level lies at 173.35.
This .618 relationship between the triangle's alternating waves E and C shows where IWM stalled today in its sharp rally off June 14 lows. IWM stalled at 173.34, one cent below 173.35. See chart below.
Credit is given to another TV member, @MiserableToppings, who pointed out this triangle pattern last week on one of his charts using EW analysis on a different US index ( NASDAQ:NDX NASDAQ:QQQ ).
DISCLAIMER: This is a hypothetical short trade using TV's short-position calculator. This idea is solely for educational / entertainment purposes and does not constitute financial advice or an investment recommendation and cannot account for any person's particular financial circumstances. I would never want other investors / traders to lose money by relying *solely* on this idea rather than doing their own due diligence. Before entering any trade, please evaluate the risks of (i) the instrument / security being traded, (ii) the type of trade and its timeframe, (iii) risks inherent in that type of trade and its time frame, (iv) the inherent risks of shorting securities (presenting unlimited risk without hard stops in place), (v) the inherent risks of trading options, leveraged ETFs, and cryptocurrencies, and (vi) all financial risks arising each person's personal financial circumstances.
Watching IWM closely next few weeks !!!Refer to my earlier chart here
The Russell 2000 is giving us clear clues to how the market is likely going to behave in the coming months. It has not been successful breaking out of the resistance at 233.80 since March 2021.
It made attempts in Jun and July 2021 but both failed miserably! The straw that is going to break the camel's back will be the support at 207.17. In the coming weeks, watch this chart closely. If it falls below this level, then it is likely to head towards 199 level to close the first gap.
Worst case scenario, it will head further south to 165 level.
Please do your own due diligence.
Closed (IRA): IWM August 5th 154 Short Put... for a .49 debit.
Comments: (Late Post). Opened for a 1.56 credit. (See Post Below). Closed it on Friday for .49; 1.07 ($107) profit.
IWM and the Russell 2000, where's the bottom?Here's my take on IWM, the ETF that tracks the Russell2000. As you can see, I ultimately see IWM falling all the way to around $165. That's about 16% below where we are now and 12% below our lowest point of last week. I believe the market tailwinds produced by the earnings of market powerhouses Google, Apple, Microsoft, and Amazon will quickly subside and the headwinds of inflation will replace them.
My target is very near the 50% retracement point of the height of the last wave from the Covid crash bottom of about $95 to the all time high of $245. The 50% retracement point is the most common, but it can range anywhere from 33% to 66%, generally. You can also see that my target seeks to close the 8.15% gap that was created the weekend Biden was declared the winner of the 2020 Presidential election by all the major news outlets. I am not someone that normally puts as much stock into "gap filling" as others seem to do, but this is an exceptionally large gap where lots of money piled into the market. 8.15%! In hindsight, this was a powerful gap signifying that the bull trend was about to kick into high gear. IWM proceeded to go up 35% in the next 3 months. Seems so long ago!
I find it interesting that the gap coincided perfectly with the All Time High that was hit just prior to the covid crash in Feb/Mar 2020. Coincidence? Hmmm.....
Short at 174 - 176Incrementally adding to a short position here up to 176. Don't see this trend line from early June breaking. If it does I think the buck stops at 176. If you think funds are going long small caps in this environment, you shouldn't be in the market. Not financial advice.
IWM Weekly BULLISHIWM is right back to where it faced tops in 2018 and the 2020 crash, but this time it could be major support.
This current selloff has been a very orderly and perfect flag pattern on declining volume.
I think we're at major support and the green bullish arrow is what I am looking for
The market already faced a huge crash in 2020 because of Dr. Fauci and his moronic lockdowns. Are we going to plummet again? Not looking like it. The previous November 2021 top doesn't look much like a top on the weekly charts. I think we'll break out of this flag to the upside and be right back up to previous highs, maybe more
Closing: IWM August 19th 162/179 Short Strangle... for a 5.15 debit.
Comments: Rolled this and/or adjusted it a bunch of times (See Post Below), collecting a total of 5.60 in credits. Closing it out here for a small (.45/$45) profit while I can.
Opened (IRA): IWM September 16th 140 Short Put... for a 1.68 credit.
Comments: Targeting the <16 delta strike paying around 1% of the strike price in credit to emulate dollar cost averaging into the broad market. Going out to September here while I wait for another shorter duration weekly (September 2nd) to open up.
