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IWM & QQQ Gaps Likely to Be Faded

Yesterday's bear flag formation, breakdown & follow-thru price action in IWM could not have been any more 'textbook' perfect. However, the small caps were saved by the bell before playing out to the measured target (or my target zone). As of 8am ET, IWM is currently trading just below 107 in pre-market. Either those gains must be faded before or immediately after the open, or the symmetry of this pattern will be foiled.

IWM 10-minute March 8th close

IWM 10-minute March 8th close

As of shortly after 8am, QQQ is poised to gap up to just below this resistance zone, where I favor a reversal.

QQQ 10-min March 8th close

QQQ 10-min March 8th close

The 60-minute time frame (below) supersedes the developments on the 10-minute chart. This bearish rising wedge breakdown on QQQ still appears to be in the very early stage of what would project to a much larger downside move.

QQQ 60-minute March 8th close

QQQ 60-minute March 8th close

By all accounts, this bearish rising wedge breakdown on the IWM 60-minute chart likely sparked an intermediate-term downtrend that should bring prices lower in the coming days/weeks unless it proves to be a major bear-trap/whipsaw signal.

IWM 60-minute March 8th close

IWM 60-minute March 8th close

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Mar 9, 2016 8:26am|Categories: Equity Market Analysis|Tags: , , , |5 Comments

5 Comments

  1. Lisa Trading March 9, 2016 8:41 am at 8:41 am

    Morning Randy, is there a SL point where we should get out of TWM? I’m thinking if IWM goes above 107ish then perhaps I should cut.

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    • rsotc March 9, 2016 8:51 am at 8:51 am

      Lisa- That would all depending on your average cost, your typical risk/stop-loss allowance, your downside/profit target, etc. but the suggested stop for the March 4th TNA short entry (or RWM, TWM or any other $RUT short proxy) remains on a daily close above 1130 on the $RUT, which I still think is idea for a trade that has the potential to morph into a multi-week or possibly a multi-month+ swing short trade. Again, if you’re just looking for a relatively quick pullback trade then a more aggressive stop might be warranted.

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      • Lisa Trading March 9, 2016 9:37 am at 9:37 am

        Thanks Randy for the advice! Need sometime to think about it before making the next move.

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  2. snp March 9, 2016 9:25 am at 9:25 am

    yesterday smelled of sector redistribution rather than a pull back. charts looking a bid like sideways consolidation

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  3. riverbirch March 9, 2016 12:57 pm at 12:57 pm

    Market may become volatile as we approach March OpEx next week.

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