The Next Set-Up: Russell 2000

Do You See It ?

It’s not always what’s happening; it’s also what’s not happening.

‘The curious incident of the dog in the night-time’ … the dog did not bark and so indicated, it knew the killer.

In Steven Van Metre’s Sunday night update (time stamp 5:55), he highlighted that small caps, IWM, (Russell 2000) tracking fund is in a ‘crash pattern’.

We’re going to look at the small caps and see what’s there and what’s not.

Russell 2000 (IWM):

Weekly Chart of IWM

The up-thrust is clear … we can see that.

However, the question is, what’s not happened with this (potential) set-up?

Moving to the daily chart, it shows the up-thrust has not been tested.

There’s no rule that says it has to be.

However, price action shows a spring set-up and retrace in process (below). We also have a Fibonacci target that looks like it might work out.

Moving closer in on the daily.

A retrace to the 62% level, would (could) act as the test of the up-thrust shown on the weekly chart.

That move if it takes place, would create its own up-thrust of the resistance area (below the 62%, level).

On top of that, we may have financial media helping out by getting participants on the wrong side; if so, they’re likely to foment news stories of continued ‘recovery’ or ‘inflation’ moderating … or some such non-sense.

The Media’s Role

In fact, if we get a retrace and the press does not jump on board … I’d be wary of the set-up (not advice, not a recommendation).

Remember what a good job they did with gold … $3,000/oz, is “imminent”, right?

Gold Down, Market Up?

Is that possible?

For starters, the question is what’s called a ‘mind-trap’. A certain way of thinking that causes one to get boxed-in.

The dollar continues its rally and gold appears to still be inversely correlated. We’ll stay with that as the main indicator of GDX downside potential.

Yesterday, it was thought the up-side correction in GDX, was complete … and that may still hold true. Today’s action looks like a minor test (thus far) of that correction.

Note, at this juncture, heavy-hitter, NEM, has posted out-side-down from yesterday’s price bar … hinting that it’s ready to continue lower.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

‘Fed – Fake’

After The Close

One-Way Before

Opposite-Way After

As is typical of Fed announcements, the market tends to go one way before the speech … then, the opposite way after the speech.

As real estate (IYR) pushed higher before the speech, it got just a little too far upward for comfort. The short position was closed out for one managed account.

As time progressed, price action was clearly setting up a spring condition; seen in the 30-minute leveraged inverse fund DRV, above.

The Project Stimulus Account closed its TZA position (for profit, table to follow) and the account then positioned long DRV, at about 4.49 (not advice, not a recommendation).

The stop is tight … the low of the day @ 4.42 (not advice, not a recommendation)

We’ll see what happens next

Stay Tuned

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Russell 2000 … Channel ?

Late Session

Possible Trading Channel Forming

The past six months shows the Russell 2000 (IWM) in choppy and impulsive action; both up and down.

The last eight trading days have seen that choppy action begin to exhibit a hint of order.

It does not look like much … until you put in a trend-line .. or two:

Adding to the intrigue; channel width is at Fibonacci 8-Days.

If today’s session closes lower (no guarantees) and posts a new daily low (below 220.26), it adds weight the Russell may be in the very early stages of trending lower.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Plug has been Pulled

Mid Session

92-Years Almost To The Day

Barring any new highs in the S&P, which seems less and less likely, the market has bookended two historic extremes.

September 3rd, 1929, was the peak back then; September 2nd, 2021, is the peak now.

This site has said many times, if we’re doing our job right, whenever the big reversal comes, we’ll already be in position (not advice, not a recommendation).

So, far that has proven to be correct; having gone short via DRV and TZA during the past week.

This down move is still very young. It’s almost imperceptible and could somehow be negated.

However, with each passing day when there’s no attempt or unsuccessful attempts at new highs, downside probability continues to build.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Selling At The Top

Late Session

If The Fed’s Doing It, Shouldn’t We?

You don’t want to be left holding the bag.

David at The Money GPS has an excellent update, linked here.

Looks like they really do ring a bell at the top.

However, does this news story (The Fed selling everything) corroborate with price action?

In the case of the Russell 2000 (IWM) above, the answer appears to be yes.

Price action got itself into and up-thrust condition, rolled over, then tested and is now continuing lower.

A short position was opened in IWM (via TZA) during this session with a stop at the TZA day’s low (not advice, not a recommendation).

Yesterday’s short on IYR (via DRV) continues to post green and is confirming the overall markets may be peaking and reversing simultaneously.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.