Editors Note:

The Russell 2000 imploded with a 2% decline to lead the big caps lower. Wednesday was a bad day for market sentiment. The Russell 2000 is the sentiment indicator for fund managers, and it is flashing a huge warning sign. The sharp sell off in small caps suggests managers have decided to cash in their chips on the China trade agreement bet. They have been wildly successful since the end of December and it is time for caution.

Current Portfolio

Stop Loss Updates

Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.

Profit Targets

Check the graphic below for any profit stops in green. We need to always be prepared for a profit exit at resistance.

Current Position Changes

IWM - Russell 2000 ETF
The long position was stopped at $154.85.

Full updates on all plays on Wednesday and Saturday. Only closed plays are updated on other days.

BULLISH Play Updates

IWM - Russell 200 ETF - ETF Profile


We reentered the position on Tuesday and the result was the same. The Russell imploded today with a 2% decline to stop us out again.

Original Trade Description: March 2nd

The investment seeks to track the investment results of the Russell 2000 Index, which measures the performance of the small-capitalization sector of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index. Company description from FinViz.com.

This is a short-term trading position based on expectations for a Chinese trade deal to be completed in March. I expect the markets to struggle higher into that president's meeting in Florida and then roll over.

The 30-min chart on the Russell shows a potential breakout ahead over the 1,600 level. The IWM has already closed over the 200-day, which has been holding the index back. It is entirely possible the Russell could run to 1,700 over the next three weeks if the China headlines continue to be positive.

However, this is a high risk position. The slightest headline about a glitch in the negotiations could tank the market. I do believe the prior highs are going to act like a tractor beam for the indexes as long as we do not suffer a headline disaster.

The end of February weakness was right on schedule and now we are poised for a directional move. Given 10-weeks of gains, that could be in either direction.

Position 3/5/19:
Closed 3/6: Long April $162 call @ $1.07, exit .61, -.46 loss.

Prior Position 3/4/19:
Long April $162 call @ $1.57, stopped $155.65, -.65 loss. RELOAD!

BEARISH Play Updates

No Current Puts