I went long on TWM, which is the UltraShort for the Russell index, at 26.63 this morning. Right now the trade is profitable, and if there isn’t any further weakening in the index heading into the close, I’ll probably close out my position by the end of day. Right now my stop-loss is 25.99, but I won’t hesitate to raise it if it breaks below the 26.36 barrior.
I waited for about the first 30 minutes of the trading session today before jumping into TWM because I just didn’t trust the morning weakness to hold without some attempt by the bulls to push the market higher, so once we had a nice bounce to close the morning gap, that is when I took my long position in TWM.
Also worth noting is the chart on the Russell index that shows a very nicely defined area of resistance at its highs. I’m not suggesting that those highs are a definitive top in this market, but I do believe they provide an excellent setup to go short, via TWM, on without major downside risk. The index itself is very overbought, and should the overhead resistance hold, there is a nice downside opportunity here that should be capitalized on.
Here’s the chart on the Russell…