SRTY Entries

I'm getting a lot of emails about people wanting to enter SRTY (3x short IWM), it's easier for me to respond here than many times over and over.

First as I showed Tuesday in this post, NASDAQ Getting Hit a Little Harder Than it Apppears

The top of the rounding area is soft, looking very thin like an egg shell, breadth hasn't improved, in fact in small caps yesterday it was one of the only breadth indicators that moved and that was down as mentioned in last night's Daily Wrap, ironic that this happened yesterday as the IWM/Russell 2000 is filled with small caps.

The point of the post above is this chart...

 This is the QQQ over the entire October rally color coded at the bottom to show the stage 1 base, very strong area, stage 2 mark up in green, also very strong area , stage 3 distribution is starting in to the topping process and at red full on stage 3 top with no 3C support as it is deeply leading negative. You can almost think of this as a roof you are walking over and 3C as the framing or underlying structure, at the top where it disappears, this is a very weak area, why do you think volatility has died down so much and the market needs so many levers just to get a green close of +0.007%?

It looks like the IWM is falling through this structure after a small head fake move which seems to have worked as sentiment from StockTwits shows they are long IWM here.

This is the IWM intraday on a 10 min chart, note the reversal candle, a star and higher than previous volume, this is a high probability candlestick reversal area, they carry no target, just that the trend is likely to change. I'd be looking for a similar bearish candle on higher volume indicating churning.

TICK is one of your best friends intraday...

 Note the TICK trend change on the IWM trend change, so draw those trendlines and look for the break of the trend.

I captured these a bit ago for one of the emails I was answering before they started piling up... This is TF/Russell 2000 Futures...

1 min chart shows the downtrend has been in line and also shows the negative
I mentioned in the A.M. Update. In other words, there's confirmation on the downside move, unluke the upside move.

 This is the TF 5 min leading negative chart with TF reaching toward 3C's leading position.

 And the larger 7 min chart, the two charts that I must have to enter a trade.

However even the 15 min chart has totally fallen apart from a larger negative divegrence.

I suspect there's going to be a lot of volatility today to keep longs engaged, but underlying conditions are clearly falling apart like bricks coming down from that roof above.

Remember that candlestick reversal patterns on increasing volume are much more likely to be effective.