I wanted to highlight the fact that while the TWM (2x short Russell 2000 Small Cap Index ETF) active trade is playing out as expected so far, it appears that IWM will hit the 166.44 support level, which was comparable to the 14.23 resistance level on TWM in which T1 was set slightly below, before TWM hits T1. Click chart images to expand.

While I still like this trade & continue to expect more downside in the small caps in the coming weeks to months, there is a decent chance of a reaction (reversal) once IWM hits the 166.44ish level unless the large caps (SPY, QQQ, DIA) start to move impulsively lower before then. If IWM does bounce around the 166.44 level, TWM will pullback.

At this time I don’t expect anything more than a relatively minor & fleeting reaction off that support level in IWM but just wanted to pass along my thoughts for those in this trade or considering a new short position in the small caps. Again, whether or not IWM reversed off that support level & by how much will likely depend on how the large caps trade over the next week or so.