The IYT short which was entered in 2 phases is going as planned, the position is in the green and I thought now is probably a good time to update it.
From my perspective since it's a full size core position (there's a little room to add, but by and large it's a full position), there's not much to do other than be patient and let the position work. There's a decent chance of a gap fill from this morning's gap , especially if we get some stronger market signals, but it's not anything I would even consider trying to trade around, this one is set and I'm leaving it in place, at most I might add what is about 10% still available without breaking rules on max. position size, but only if a worthwhile opportunity presents itself and is enticing enough. Again, otherwise I don't think there's much to do here other than let the position work.
For those interested in diversifying out a bit in to transports, there's still an excellent opportunity here for a longer term position trade, transports are still in an overall EXCELLENT area for a short entry and tactically, you may even get a slightly better entry. However, just as I phased in to the position in 2 parts, I'd have no problem with a partial entry here and setting price alerts looking for a little bounce to fill out the rest. For that matter if we are taking a wider view of the market, I'd have no problem filling out the entire position right here, but if the opportunity is there, why not try to take advantage of it.
While IYT (Short) is the actual asset , I use DJ-20 to confirm the IYT charts so I'll have some mixed in with IYT for that purpose.
This is the same chart shown earlier today, the Ascending Wedge, the false break lower as would normally be expected which transitioned in to the August cycle's base around 8/1-8/8 followed by mark-up which would have shaken out initial shorts on the break down from the wedge and provided some extra momentum on the upside to make the Wedge head fake we have come to expect over the years , followed by the conclusion of stage 3 top of the August cycle with a head fake move just before transitioning down to stage 4 decline.
As our concepts go, this is textbook.
On the 60 min DJ-20 3C chart, the change in the upside price ROC is the first warning signal that a seemingly bullish change of character is actually warning that a top is nearby (orange arrow). The divergence in to the Wedge's top developed quickly and with a lot of confirmation so we entered the first half of the position at #1 and as the break below the Wedge failed and moved to the August cycle base and eventual breakout, we entered the second half of the position, the position is now in the green and you can see the deterioration in 3C since the August cycle which was always expected since we first identified the base forming in early August.
IYT's 15 min chart, being a faster timeframe shows more detail with the first negative and entry, the divegrence for the August cycle's base and the distribution in to stage 3 as well as the head fake move before transitioning down.
Note the current leading negative divegrence, in line with the 60 min chart showing this to be a stronger area of distribution than the initial entry, as expected.
DJ-20 5 min shows the area of the stage 3 top and the head fake move, the divergence is pretty obvious. Any counter trend moves to the upside since have been distributed in pretty dramatic fashion.
Very short term on the IYT 2 min chart, like many of the averages, we are seeing a small divegrence (positive) develop, the initial target would be the gap around the $150.90 level, it really depends on the size (time) and quality (intensity) of the divegrence, but if you are interested I'd set price alerts in the gap area at minimum and maybe a few just above at technical levels you deem appropriate.
I'll be setting alerts as well for anyone who is interested in the position so I can follow up if we get the bounce here which I'm leaning toward.
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