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RUSSELL 2000

Mar 2 Session Profile | /ES S&P 500 E-Mini FuturesDescription: Things I'm thinking about this morning. Points of Interest: Untested POCs, October low, 200 moving average, 50% and 61.8% retracements, gap at the beginning of the sell-off, Monday $VIX pop to $40+. Technical: Untested POCs (see related ideas) beneath February high were erased in a swift correction. In my opinion, the virus-related news is the match that lit the fire (i.e., this was coming). I'm expecting some sort of bounce and retest of the lows. Additionally, half of the S&P 500 stocks are in bear market territory right now (www.reuters.com). Index Analysis: $RUT: TVC:RUT $NDX: TVC:NDX $DJI: TVC:DJI $NYA: TVC:NYA Fundamental: Fed split on whether to cut or maintain rates; spending sees loss in momentum, but consumer fundamentals in a good place; goods trade deficit contracted; manufacturing business outlook recently rose to it's highest levels, but virus and future trade issues may complicate things; housing market hot as home building permits rise to highest levels; debt levels declining; world supply chains at risk due to this virus thing; global yields have generated massive inflows in passive indices that are heavily weighted towards a few stocks. In The News: "Federal Reserve Chair Jerome Powell on Friday said the central bank will “act as appropriate” to support the economy in the face of risks posed by the coronavirus epidemic, though he said the economy remains in good shape overall" (www.reuters.com). Fed funds futures "pricing in more than an 80% chance of a new 1% to 1.25% Fed target range for short-term borrowing costs by March 18, when the Fed next meets, down from the current 1.5% to 1.75% range. Pricing also shows traders expect rates to drop to the 0.5% to 0.75% range by July" (www.reuters.com) “Consumers shielded the economy from global headwinds for most of 2019 but they won’t prove immune to the coronavirus outbreak,” said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York. “Persistently low inflation bolsters the case for a Fed rate cut as soon as March given the sharp tightening in financial conditions" (www.reuters.com) "Still, consumer fundamentals remain healthy. Personal income jumped 0.6% in January, the most since February 2019, after gaining 0.1% in December" (www.reuters.com) " he shrinking goods trade deficit could somewhat limit the downside to GDP growth. A third report on Friday, the Commerce Department said the goods trade deficit contracted 4.6% to $65.5 billion in January. Goods imports tumbled 2.2% last month and exports dropped 1.0%" (www.reuters.com) "While the coronavirus is disrupting supply chains for manufacturing, some sections of the industry do not appear to be experiencing significant distress. The Chicago Purchasing Management Index rose 6.1 points in February to a reading of 49.0, the highest level since August 2019, a fourth report showed. The joint MNI Indicators and ISM-Chicago survey suggested a marginal impact on businesses in Chicago area from both the coronavirus and last month’s signing of a “Phase 1” trade deal between the United States and China" (www.reuters.com) Information I'm Carrying Forward: Historically, "Epidemics normally have a severe but relatively short-lived impact on economic activity, with the impact on manufacturing and consumption measured in weeks or at worst a few months." (www.reuters.com) "Despite historically low interest rates, U.S. companies are being unusually frugal, holding back on issuing new debt and pumping up their balance sheets with cash. Why it matters: Historically, when interest rates are low and the economy is strong, companies have levered up to increase capital expenditures and buy assets in order to expand. The opposite is happening now." (www.axios.com) "So add low interest rates to suppressed inflation (temporarily) coupled with slowing worldwide growth, and we get a powerful upward force for stock prices. Our upside target for the S&P 500 Index is now 3600 or higher." (www.cumber.com) "A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months. While China’s government has cut interest rates, ordered banks to boost lending and loosened criteria for companies to restart operations, many of the nation’s private businesses say they’ve been unable to access the funding they need to meet upcoming deadlines for debt and salary payments. Without more financial support or a sudden rebound in China’s economy, some may have to shut for good." (www.bloomberg.com) Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
CME_MINI:ES1!
by Physik
Diary | 3/2/2020 | RUT SpreadJustification: Directional Play: Yes, establishing long delta position to reduce short delta and margin. Technical: Below October low. If/Then: Take profit? 50% of credit received. Where will you hedge? $1410 Strategy Details: Short and Long leg: $1410, $1395 Short Leg Delta: 0.16 Expiration: March 6 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
TVC:RUT
by Physik
Turning A Loser Into A Winner | 3/1/2020 | RUT SpreadWhat a sell-off! Here is a quick summary of how I was able to turn a sizeable loser into a winner. Trade 1: Opening Credit Put Spread $1.10CR To Establish Dynamically Long Position Short Leg: 2020-02-20 Sold 1 RUT 03/06/20 Put 1595.00 @ 3.75 Long Leg: 2020-02-20 Bought 1 RUT 03/06/20 Put 1575.00 @ 2.65 Trade 2: Opening Credit Call Spread $2.20CR To Reduce Directional Risk 2020-02-24 Bought 1 RUT 03/06/20 Call 1710.00 @ 1.34 2020-02-24 Sold 1 RUT 03/06/20 Call 1690.00 @ 3.54 Trade 3: Closing Trade 2 $1.25DB 2020-02-25 Sold 1 RUT 03/06/20 Call 1710.00 @ 0.60 2020-02-25 Bought 1 RUT 03/06/20 Call 1690.00 @ 1.85 Trade 4: Opening Credit Call Spread $2.45CR Lowering Call Side To Further Reduce Directional Risk 2020-02-25 Bought 1 RUT 03/06/20 Call 1695.00 @ 1.50 2020-02-25 Sold 1 RUT 03/06/20 Call 1675.00 @ 3.95 Trade 5: Closing Trade 4 $1.90DB 2020-02-25 Sold 1 RUT 03/06/20 Call 1695.00 @ 1.15 2020-02-25 Bought 1 RUT 03/06/20 Call 1675.00 @ 3.05 Trade 6: Opening Credit Call Spread $2.67CR Lowering Call Side To Further Reduce Directional Risk 2020-02-25 Bought 1 RUT 03/06/20 Call 1685.00 @ 1.90 2020-02-25 Sold 1 RUT 03/06/20 Call 1665.00 @ 4.57 Trade 7: Closing Trade 6 $1.97DB 2020-02-25 Sold 1 RUT 03/06/20 Call 1685.00 @ 1.12 2020-02-25 Bought 1 RUT 03/06/20 Call 1665.00 @ 3.09 Trade 8: Opening Credit Call Spread $2.65CR Lowering Call Side To Reduce Directional Risk 2020-02-25 Bought 1 RUT 03/06/20 Call 1665.00 @ 3.08 2020-02-25 Sold 1 RUT 03/06/20 Call 1650.00 @ 5.73 Trade 9: Closing Trade 8 $1.60DB 2020-02-26 Sold 1 RUT 03/06/20 Call 1665.00 @ 1.69 2020-02-26 Bought 1 RUT 03/06/20 Call 1650.00 @ 3.29 Trade 10: Rolling Trade 1 To The Call Side $0.01CR To Eliminate All Risk To The Downside 2020-02-26 Bought 1 RUT 03/06/20 Put 1595.00 @ 45.22 2020-02-26 Bought 1 RUT 03/06/20 Call 1595.00 @ 19.04 2020-02-26 Sold 1 RUT 03/06/20 Put 1575.00 @ 35.19 2020-02-26 Sold 1 RUT 03/06/20 Call 1575.00 @ 29.08 Trade 11: Opening Credit Call Spread $2.00CR To Capitalize On The Movement Downward (i.e., take in extra premium) 2020-02-27 Sold 1 RUT 03/06/20 Call 1580.00 @ 8.84 2020-02-27 Bought 1 RUT 03/06/20 Call 1590.00 @ 6.84 Trade 12: Opening Credit Call Spread $0.77CR To Capitalize On The Movement Downward (i.e., take in extra premium) 2020-02-28 Sold 1 RUT 02/28/20 Call 1500.00 @ 1.29 2020-02-28 Bought 1 RUT 02/28/20 Call 1510.00 @ 0.52 Trade 13: Closed Trade 12 $0.50DB 2020-02-28 Sold 1 RUT 02/28/20 Call 1510.00 @ 0.45 2020-02-28 Bought 1 RUT 02/28/20 Call 1500.00 @ 0.95 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up. IWM RUT
TVC:RUT
by Physik
How the Russell 2000 indicates a correction in the S&P 500The Russell 2000 small cap index has been a prevalent lagger throughout the whole US equity rally into all-time highs. This is of concern for the health of the economy and the health of the S&P 500 index. The small-cap sector reacts the most to economic conditions and monetary policy, being the most affected if they cannot make new highs and are over 8.5% away from all-time highs we can infer that a stronger correction of 8-10% may occur in the S&P 500. The S&P 500 is full of companies that have been artificially inflated by stock buy-backs and also monetary policy allowing for cheaper borrowing. There is a healthy retrace coming out to catch down to small caps since they have not relished in the strong economic conditions. Which presents another concern, is the economy that strong to begin with? If there is a correction, there could be more buyers in both the S&P 500 and Russell 2000 companies to help markets reach all-time highs yet again.
TVC:SPXEducation
by TRADEPROAcademy
IWM Volume TrendVolume spike very likely soon! Trend has been:VOLUME UP=PRICES DOWN. Watch for initial divergence where IWM could spike before correction. Eyes on that volume! This is not necessarily a good place to go long on IWM but it certainly could make a strong move up before any correction. I am positioned mostly short on market but I've had a small "long" hedge in IWM call options. Small caps have been lagging behind market oddly- I cannot discern if this is a red flag warning to the entire market or small caps are about to catch up. The volume certainly tells a story worth reading and the the 36,000ft view tells me be very careful up here- market pressing upward with major decrease in volume is a recipe for a major PIVOT down.
AMEX:IWM
by gghsusa