FEATURED CONTENT

[Cash Out] Next IPO Poised to Pop!

Want a piece of the next Uber, Lyft or Pinterest when it IPOs?

Get your seat at the table and learn how you can capture these explosive moves before others!.

Join now to lock in Founding Member Pricing for a Limited Time!

Today’s trade: Short the IWM and the Russell 2000

Jason BondJason Bond ·

The set-up:  Seemingly every index is at record highs and seems to be staying there, but the Russell 2000 index has had the biggest move of them all. The iShares Russell 2000 ETF (IWM) has been overbought for almost a month now, so I’ve been looking for a signal that things were about to change and that it is time to get short. We got that signal on Monday.

The chart:

Notice the green line on this chart, the 5-day exponential moving average. It has been support for the IWM throughout this entire rally.

Monday, IWM closed below it for the first time since early September. Moreover, it broke that line on a day it had a bearish engulfing candle.

This makes this trade easy to evaluate, because it gives us defined risk at the $150.75 level, with a target set back in the mid $140s; specifically, the high in July was $144, which I think will act as support.

It’s a great R-multiple, which is why I can make this call despite the bull market we have been in and the record highs we have seen.

How to play it: You can short the IWM or use a leveraged ETF that bets against it, but you are looking today to make sure it stays below that $150.75 high. I don’t have a preference – since I don’t play ETFs – but my Raging Bull colleague Jeff Bishop of TopStockPicks.com prefers the Direxion Daily Small Cap Bear 3X ETF (TZA), which he currently is holding.

If the IWM takes out the highs and rips it all day, the trade is off, but that would just have me looking for the next technical set-up to get short here, because I believe this reversal is coming sooner or later.

#-#-#

Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks.

You may also like

Exclusive System Tracks Wall St. Insiders

“Dollar Ace Simply Exposes Information That Wall Street Wants To Keep Quiet” Said Kyle Dennis
“One member, Wesley M., has already reported 360%+ gains in just a few short days. Don’t miss this!”
(Reserve Access Now)

“What Recession?!” Jason Bond nets $55,060 in realized profit in One Day

After going 6 for 6 on profitable trades recently, we caught up with Jason to ask how he did it.
Check out Jason’s exclusive interview revealing this tightly guarded strategy. (Watch Now)

RagingBull.com Co-Founder, Jeff Bishop, Launches High Conviction Trade Service

“We listen to our clients and we give them EXACTLY what they want, so we designed a service to deliver 1 trade, 1 time a week, with a 100%+ PROFIT TARGET, directly to your inbox every Monday before the market opens. (Read More)

Be a Better Stock Trader, Starting Today

Get the expert insights, tips and strategies you need to optimize your trading skills and profiles
START NOW