The suspicion grows that the Russell 2000 is at or very near a potentially important top (see inset). If you haven’t seen the video I made last week to help you leverage it, click here. The chart shows IWM to have peaked last week almost precisely at the D target projected from the A2 low in the chart. The sharp pullback from that high would have allowed for partial profit taking on some puts we already held. However, because the week ended with IWM in a short squeeze, it is appropriate to adjust our sights slightly higher. That is the purpose of this tout, with a new D target derived from the lowered point ‘A’. The outlook for IWM is firmly corroborated by this long-term chart in the E-Mini Russell, but also by a lesser ABC pattern in RTY of a sort that often works precisely. _______ UPDATE (Jan 27, 8:36 p.m. EST): IWM has gotten hit hard after topping 9 cents above the 217.82 target I’d flagged as a place for a potentially important top to occur. Now let’s see if there’s enough power behind the selling to muffle the buy-the-dips bozos. _______ UPDATE (Jan 30): Last week’s 6% drop was sufficient to invigorate the puts I’d suggested buying earlier. (Note: I posted a timely video just ahead of the selloff explaining in detail how to put on a bearish butterfly spread in this vehicle.) Cash out half of them if and when their price doubles, but keep the rest for a potential home run. If you need to roll your position to extend its duration, please let me know in the chat room so that I can provide timely guidance. ______ UPDATE (Feb 2, 6:14 p.m.): IWM’s snap-back rally has slightly lagged the Nasdaq 100’s, but it wouldn’t take much to catch it up. Regardless, because it has shown diminished relative strength, we should focus on IWM as a telltale and a leading indicator in case the broad averages feint higher but fail to go anywhere. ______ UPDATE (Feb 4, 9:54 p.m.): IWM poked its little snout above p-218.33 of this pattern, but it will need to push decisively past it to lock in on the 231.81 target.
IWM – Russell 2000 ETF (Last:218.62)