NEW BEARISH Plays

iShares Russell 2000 - IWM - close 63.75 change +0.04 stop 49.15

Company Description:
iShares Russell 2000 Index Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the Russell 2000 Index (the Index). The Index measures the performances of the small-capitalization sector of the United States equity market. The Index is a float-adjusted capitalization-weighted index of equity securities issued by the approximately 2,000 smallest issuers in the Russell 3000 Index.

Target(s): 60.75, 59.50, 58.75
Key Support/Resistance Areas: 63.30, 62.60, 61.50, 60.70, 58.00
Time Frame: 1 to 2 weeks

Why We Like It:
IWM is ready for a move lower to at least test recent lows but I think it could go all the way down to the $58.00 area which is below our 3rd target for this trade. The stock is barely hanging on to its lowest closing price since February. It also printed a reversal bar at the 200-day SMA today which give us a good reference point to place a tight protective stop just above at $63.75. I would like to see IWM retrace some of this afternoon's decline and will use $62.30 as an ideal entry point. If IWM is weak at the open traders may also consider entering positions, especially if the index can not trade above its opening range. This trade could be quick so I urge readers to protect profits if IWM is moving in our direction.

Suggested Position: Short IWM stock

Option Traders:
Suggested Position: Buy July $61.00 PUT, current ask $2.93

Annotated chart:

Entry on June xx
Earnings N/A (unconfirmed)
Average Daily Volume: 101 million
Listed on June 9, 2010