IYT / DJ-20 (Transports) Short

This is a position I like, there was an area I was looking for the last day or so for price to break above, it did and it's pretty close to that short position I'd add to or start a new one. This IYT Update from Tuesday shows what I was looking for to happen, I felt it was a little early to confirm a head fake at the time, but I don't feel that way any more. For a new position (I prefer at least an August Put / IYT) I'd have no problem starting it here, I'd prefer leave a little room- up to half of the intended position size with full position size risk management in place before entering even a partial trade. If we get stronger intraday prices, so be it, it's a gift and I'd take it and fill out the position.


As far as timing, entering a position, etc. there is no right or wrong answer here, the right answer is the one that fits your time, the kinds of trades you prefer, your risk tolerance and how you weight the information below.

For me, if I had room to add or wanted additional exposure, I'd have no problem adding in here, I'd prefer a little higher intraday, but I have no problem holding the current put position, I would have no problem adding, but that's my personality.

 The DJ-20 and IYT are the same, IYT is the ETF, both Transports. The DJ-20 has better volume and thus displays better sometimes, but their signals are almost always exactly the same.

This is the triangle I mentioned, bullish ascending triangle, traders would be waiting to go long on a breakoit which is why I was waiting on the breakout, but information was already in place that probabilities were sky high it would be a head fake/bull trap.

The 2 hour chart clearly shows this last leg has seen no strength os sponsorship, the exact opposite.

 IYT 30 min shows the exact same thing, no support on this last leg so how could a breakout lead to a new leg up? It was almost destined 100% to be a bull trap.

DJ-20 15 min chart, pretty clear confirmation of a head fake breakout. this is actually a low risk area to enter, the head fake move has been made, you get better pricing for a short entry and risk is lower as you can place a stop ABOVE the recent highs, please not in an obvious place and I ALWAYS prefer mental over orders sitting with your broker.

 IYT 10 min, again the leg up has no support/confirmation so why would the breakout? It doesn't

IYT 5 min is a zoomed in closer look at intraday movement, Clearly the breakout did not see 3C confirmation, what it appears to show is institutional shorts selling to retail longs.

Intraday the 1 min chart does have some positives, do they mean much to me compared to everything above? No, except maybe a slightly better entry, but maybe you miss the position at an already excellent area. these are the kinds of moves we wait for, we call it, "Letting the trade come to us".

It's not just about price or head fakes, it's about the 3C confirmation of highest probabilities.

 2 min is in line only, so not a strong positive intraday.

IYT 3 min and the breakout area, this is about as far as any strength to push IYT made it, 3 min and you can see clearly where it was distributed, the head fake move is the last thing we see in 80% of all reversals.