Trade Idea IWM / URTY (long)

As mentioned Friday, the IWM was the first and really only average to start putting in positive signals, that carried on through the Index futures as well.

I like the IWM a lot as a "BOUNCE" trade in the trading portfolio. I said I wouldn't close trading short positions and I won't but I do have room after closing out UVXY and I could use a little hedge there and I feel very confident that it would not only be a hedge, but it would be a money maker and when it's closed the shorts start working again.

So I've decided (given the price pattern) that a 3x long IWM ETF is how I want to go and that would be URTY, I'll likely enter a bit bigger size than normal, but I'll also likely phase in to the position and I'll show you why as the market continues to do exactly what we suspected last night, to chop along in a lateral fashion rather than carry through with more downside from Friday's close.

 This is the IWM 60 min so long term there's significant damage and that's why I want my positions leaning short.

The 10 min chart is even leading negative so the damage in this are is very clear.

Even the 5 min chart does an excellent job of highlighting it, but on a short term basis which is what we are looking at (since late Friday and last night's post), zoom in intraday on the same 5 min chart.

We have a leading positive divegrence, the QQQ also has a really nice 5 min leading positive so TQQQ might be an alternative to URTY if you prefer long exposure in the Q's for a short duration trading position.

 The intraday 1 min chart tells me probabilities are high that the IWM pulls back and continues this lateral chop and that's where my ideal entry for URTY would be, but I may enter a partial position earlier based on time and having something in place and then set price alerts to fill out the position at lower levels or if you prefer, maybe just wait for lower levels, if you miss the bus, there's always another one coming.

 This is the 5 min chart of the actual asset, URTY and it shows the same distribution at the same place and the same leading positive divergence and who the IWM was the first and only one working on accumulating as early as Friday.

As for the intraday 1 min chart, it shows the same thing as the IWM, probabilities are high that this will pullback and build a larger choppy, lateral base before making a move higher.

I said last night I'd expect that process to continue through Tuesday (which would be nice considering I have surgery tomorrow) and a move to the upside would fit nearly perfectly with Wednesday's 2 p.m. F_O_M_C meeting, even if they taper (which is largely priced in), a more dovish "maybe we'll slow down" tone would send the market higher and what we may be seeing is the market preparing for something like that, I don't think it is coincidental that the maturing of this small base around the time of the F_O_M_C is coincidence at all, if anything, you'd expect them to be taking off risk in an uncertain environment, UNLESS THEY HAVE INFORMATION that makes it less uncertain which wouldn't surprise me.