US2000 trade ideas
The RUT's textbook crash (So far). RUT has had multiple textbook crash patterns to date and if that continues we're going to soon see a capitulation period. Let's look at the markers of a break we have so far.
1/ The butterfly is a common topping pattern which usually forms when price rallies to ATH, has a sharp sell-off and then ranges for a long time. RUT formed this through 2021 and then the final spike of it came into the end of the year when the RUT started to reverse.
2/ After the initial drop we got under the support base that had held all of 2021. Which seems significant. A level holding price for a year is always liable to give us useful info later, and in this case the info we got was when it retested price was pushed away from it. What was once support is now resistance. To put this in an easier to understand why - what traders treated as cheap in 2021 they treated as expensive in 2022.
3/ The 161 break. After the rejection of the year range the 161 was always quite likely to hit but these do not break very often. The breaking of this level I think was significant. A breaking of a big 161 often signals the start of real market crashes.
4/ The market failed to hold before 220 fib. Which usually confirms a real breaking of the 161. Pullbacks are common but a reversal here is less likely. In downtrend continuation we just retest previous fib levels and then head lower to the next fib levels.
5/ A common marker I've noticed in a market break is we hit the obvious support level, have a bounce on that level and when you look at past crashes objectively it's easy to see this is an area where it'd look a lot like a low might be in. And many lows are actually made on supports like this, but in the times these dead-cat and break this is often a sign of complete bull trend failure. Capitulation comes next. Day after day, week after week the market is lower and lower.
A breaking of the last big lows would be the confirmation signal for the bearish breakout as per historic norms.
Long RUT I think my thesis for the short at this level is failing in indices with them all looking really strong intraday and trading above the stop loss zones for my shorts. Often I find these create big squeeze scenarios in which we consistently hold higher lows. Looking for bull entries into dips now.
Could be a good strong trend if we make new highs here. Probably sets the trend for the rest of the week, at least.
Joe Gun2Head Trade - Short term bottom on Russell2000?Trade Idea: Selling EURJPY
Reasoning: EURJPY to continue lower? Broken trend and EUR under pressure
Entry Level: 1752
Take Profit Level: 1794
Stop Loss: 1741.5
Risk/Reward: 4.15:1
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$RUT Canary in the Coal MineThe Russell 2k tends to be a solid indicator of broader market movement.
While we have realized a correction of ~33%, given the broader macro headwinds... this is not nearly the level expected relative to past major corrections (dot.com & housing market).
Given the past major corrections of 47% and 60%, not including the global pandemic shutdown it's apparent theres further markdown market behavior ahead.
At the least, expecting a pullback to the 100 EMA is minimum expected while pullback to the 200 EMA with a further wick down from there is not outside of reason.
The Fed has only recently begun QT with Central Bank balance sheets letting securities roll off as they mature.
With the Fed hyper-focused on inflation with demand side tools at their disposal, the bearish case remains firmly in place right now.
In addition to rates, unemployment is part of the Fed's dual mandate. Given the sheer # of available jobs (2 jobs for each unemployed person in the US), the Fed has plenty of room to focus on reigning in inflation to achieve price stability.
Will there be bear market rallies? Yes.
Will the Fed pivot? Possibly... especially given mid-term elections this fall.
Q2 closes next week, earnings will start pouring in... until the Fed changes narrative and there's substantive change, principal preservation should be the priority with a risk-off focus unless one is highly skilled at trading during extreme volatility.
US2000 has more room to fall !!RUSS2000
Intraday
We look to Sell at 1699 (stop at 1714)
We look for a temporary move higher. Risk/Reward would be poor to call a sell from current levels. The bias is still for lower levels and we look for any gains to be limited. Previous resistance located at 1700. Expect trading to remain mixed and volatile.
Our profit targets will be 1645 and 1605
Resistance: 1700 / 1750 / 1945
Support: 1640 / 1470 / 1200
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$IWM very attractive relative to S&P 500 (5/5)Shall cap relative performance to Large cap is showing a great opportunity.
REcently we have also seen the small caps valuation is as low as GFC levels, which is another indicator of good long-term buy opportunity.
Small caps (IWM) performance to self is not quite as attractive, so be aware. This could simply be an opportunity to do a long-short spread between small caps and large caps.
RSI is not quite as attractive as 2020 bottom, but nonetheless a good place to start adding.