IWM UPDATE

Yesterday the IWM broke down and really tested my patience as I'd love an IWM short here whether a longer term leveraged inverse ETF such as SRTY (3x short IWM) and/or maybe a put position. I didn't chase IWM lower yesterday, today is a perfect reason why we don't chase assets. 

So I'm watching IWM which was one of the averages that sent out a late day positive divergence suggesting it was going to make either a wider reversal process or a head fake move, either way, it was telling us that chasing the IWM after it had lost that late afternoon ground was not at all in our best interest.

As for today, I'm very interested in IWM, I'm very thankful that it did come back up and is in a nice looking position. At this moment, like the rest of the market, it's about the charts/timing and when to take action or "load up the truck". I'm not crazy about the idea of opening an options trade the day before a monthly options expiration so I'm completely depending on the charts which as I said yesterday are VERY ugly, but they can get even worse and that's what I'm looking for.

Specifically looking at IWM it is one of the most symmetrical examples of an Igloo/Chimney top as posted earlier this morning.

The charts which I'll keep pretty simple for now...

A Pretty textbook looking Igloo/Chimney example, although they are often more extreme. The "Chimney" or head fake portion as posted yesterday, GLD, SQQQ & Head Fakes, are typically fairly short relative to the reversal process and often proportional as this one looks, however even as they tend to be one of the best price-based timing indications for a trend reversal (in this case down), it's important to make sure the charts are giving good timing signals as this is really threading the needle,  plus confirming that it is a head fake/false move is the most important thing.

 Thus far I'm starting with this 2 min chart because this is the one showing the divergences yesterday that took the IWM lower, much lower relative to the other averages and this is also the one that posted the late day positive divergence suggesting it was not done in the area and would head higher.

So far this morning the 3C indication is a leading negative divergence, of course if this just continues to deteriorate, then a position in the IWM will be very enticing, op-ex tomorrow or not.

The more important 10 min chart shows what I believe was the IWM's top and the last downside pivot, then recall we opened an IWM call position which was closed earlier this week, ironically even with today's upside move, the closing of the IWM calls, Closing July 17th IWM $125 Calls was really perfect. Today the calls are worth just a little less than when we closed them on Tuesday, the difference is I doubt there are many people who would have been able to stomach holding them yesterday as their value plunged considering they expire tomorrow.

Also note to the far right the blue arrow I drew in on the chart, ideally I would like to see 3C make a move similar to the blue arrow I drew on the chart and post a new leading negative low.

 The even stronger 30 min chart shows the IWM's price/trend confirmation on the upside to the far left and the larger negative divergence, what I think was the IWM's top in the middle of the chart and the current leading negative divergence on a  30 min chart which is a very strong signal.

So as I started the post, I'll end it the same way... at this point, most of what I'm looking for is timing related, whether a position today makes the most sense, maybe tomorrow or Monday- it's up to the charts to tell us the message of the market. So far it's looking pretty good for today, but that's speculation until that objective evidence comes in and I see the chart that can't be ignored.

I just want to throw the IWM out there for your consideration, as it may be coming up very quickly.