Trade Idea: IWM Long Options or leveraged ETFs

After looking at the support levels and the 3C signals, I decided on my plan, I'm leaning toward the IWM for reasons mentioned earlier ( a lot of components of the R2K got knocked around good yesterday) and where support (obvious) is.

 This is the SPY's best looking divegrence right now, 2 min and it's not bad, not what I consider the best, but not bad either.

The 2 min IWM is looking good, it is leading, it has a nice area for a head fake move where I can add to a position or if you are very patient, wait for a head fake move to enter a position, you don't have to trade everything that comes your way and having a head fake move makes the trade a lot more attractive.

I think a move below $116.19 (support from yesterday's intraday lows) makes sense as a shakeout of stops below that level, that's likely the best short term long trade here.

This is the QQQ 3 min, it also looks decent, I just prefer the IWM, but depending on where you have exposure, for instance a lot of tech exposure, you may want to go with the SPY to bring up financial exposure, etc.


The 3 min positive doesn't mean a lot more to me at this stage.

As far as capping this move, the short divergence of only a day and a half or so is a cap on its own, you can only go so far on a gallon of gas, however HYG very short term is holding the market together and also capping it.

HYG's higher move and range is telling algos there's institutional risk on sentiment and they'll buy that, however 3C is showing us even more distribution so I'd think a move to the upside would be capped because of this as HYG will fall due to the continued distribution and the market won't be too far behind it, for now though it's acting as support.

This is why this is a short term trade position, I wouldn't even call it a swing trade and this is why I think some leverage is needed whether that be options or leveraged ETFs (long) as mentioned in an earlier post today, UPRO, URTY, TQQQ, etc.

I'm going to go ahead and enter a half size weekly IWM $116 call position and set an alert for a break under $116.19, if we get a head fake move below $116.19 in the IWM I'll look for head fake confirmation in a 3C positive divegrence and enter an April $115 call (monthly) that will also be half size, the two positions taken together will be the size of 1 normal option position.

I'm spreading out my time decay in case that's a problem, allowing for momentum and being able to act on it and giving myself some breathing room with the monthly option which is a more quality position, although maybe not as big of a potential gain.

I'll be entering that IWM weekly call now.