Relative Value TradeShort Russsell2000 Index Futures and Long SP500 Futures in search of convergence in valuation, due to worse performance of small caps relative to big caps in environment with increasing interest rates.
Russell2000
Extremely narrow BB on weekly. Signal of a big move possibly.$RUT $IWM $SPY Guessing this resolves to the downside.
Russell 2000: Small caps can outperform nextI'm looking at $RUT / $IWM here...The chart is setup in such a way that we could a massive breakout and a strong rally going forward. Downside risk is quite small, and if conservative, we could aim to risk 1-3 average ranges down.
Best of luck,
Ivan Labrie.
NOW THIS IS OVEREXTENDEDThis chart is based purely on technicals from the crash in '87.
I'm amazed how consistently markets "mean revert".
With no consideration of fundamentals, I think the over extension is happening because of the over correction in '08.
No matter how you look at it though, the next crash will be bad regardless of when it happens.
DON'T BE AFRAID OF ALL TIME HIGHSNice bull flag forming on weekly chart of IWM. Confirmation above $140 = new leg up. This is a long term trade. Don't watch it everyday.
Russell 2000 3 Day StudyPlease reference image.
Current candle closes below trend and below Bollinger Band basis. Suggests futher downside. New candle tomorrow.
IWM: stopped out. now what?Sometimes after a very strong upswing (EWT speak "impulse wave" often wave 3 of a move:see daily) the final move up doesn't amount to much (exhaustive "5th" wave). Although uncommon it is composed of 3 overlapping waves (sort of like the diagram on the 120 min.)
We are still in a uptrend but it appears to be weakening. We have a bearish divergence in the daily RSI but a positive reversal in the 120 RSI. So shorter term oversold.
So I favor we sill likely have a bounce up here perhaps form a double top on the 120 min or even minimally go to a new high. Should be a good set up for a short position.
IWM: short term follow up. Still may hit target.3 weeks ago I suggested a target of 143.5-147.(see link below) The most recent price action looks to me like a expanding triangle. I called it a way ".4". If my analysis of the form is correct it should not overlap wave ".1" high of 136.97. The low today was 136.99. If wrong I will use the stop of 136.95. If right we should soon see more thrust up followed by a longer term correction.
IWM: Working on a target. I was happy to see IWM break up. (see link below). Looks to me the 143.5-147 level is a reasonable target. Feedback always welcome. Have a great week.
Russel 2000 shortHere might be an interesting short term setup for the Russel2000.
Lets check the Facts:
Rsi(5) >96; first time since November 1998. The sample size of the occurences is pretty small. Februar 1991 and May 1997 the index kept going unabated, other occurences showed drops >2%
Distance between ma20 and price is at an historical high (see macd1,20 pannel). As you can see the price often re-test ma20 either via time (choppy sideways) or a declining market.
Best thing to do would be either a short against a reversal high or a short via open range breakout. Do not just simply short as this trade is against the main trend. Please consider avrg. daily ATR in % (1 year) as your sl.
As the Russel2000 has higher beta stocks than the SPX and DJI it is the most promising short among the US-Indices at the moment.
2/3 of the Position should be scaled out around 1295 (green line, 4% from Fridays high), rest should be in play if the market continues to fall.
Dont forget that trades sometimes need time to work, so wait for your signal.
Shorting the overbought RussellFinally a short setup for the Russell.
The ANN strategy prompted a short signal.
Don't wanna miss this opportunity.
Stop loss at last Friday's high.
Initial profit target at the 200 EMA.
Good luck.
Sell Russell 2000 assets and begin loading short positionsTarget 1260
Use Cfd, ETF or Futures.
Retracement till 50% of last bullwave
SPREAD BETWEEN DAX and RUSSELL 2000 (HISTORICALLY)As you can see this spread shows Risk Appetite.
If Russell goes parabollic like these weeks (Without Reason, just DXY effect, but remember this is bad for US Exports which are key for smallUS Caps)...Also the US 10yrs bond has driven a long AveMaria Pass till 2,30%, which means higher WACC in all Discounted Free Cash Flows Models...)
Yes US Equities, are quoting irrational quantitative ratios.. example KEYCORP a mid US Bank is quoting 6.4 x times Price to Sales Ratio - Highest Ever¡¡¡¡¡
Summary: Reverse Small Caps - and add Big Caps specially in Europe (Example: Germany)
Risks: Remember this is a pair trading strategy
SHORT RUSSELL 2000 ETFLast days performance is absolutely Aberrant - seek a retracement till 125 level.
