IWM “Bear Trap” Call
Last Update: 10/20/2017
It has been over 6-months since I’ve first engaged with CALLS (LEAPS) on IWM and I’ve been buying the dips throughout, as I still believe IWM could become one of my biggest winners this year. On my last “IWM Analysis” I discussed the matter of how the August sell-off could be one last shake out before a massive bullish reversal, and also discussed potential bear trap (red box). When IWM was trading at 135ish in mid-August, it seemed as though everyone was freaking out and the small-caps world was ending, but I was buying the dip, NOT closing my positions out of fear. As of today, IWM is back above 140ish and holding above the important pivot (horizontal red) at 139ish. If we can keep the gap opening (from today) unfilled, I think it will fuel the minor-term sentiment going forward. 144-145 is going to be the next strong resistance (rising-channel resistance & 7/25 swing high at ATH). I believe, if bulls manage to bring the price back up to that rising-channel resistance at 144ish this time around, bulls will finally break above it and finally thrive. More updates later–I am still holding all of my CALLS since 136.53, 136.72, 138.46, 139.30, 140.18, & 141.05.
It’s good to see Russell 2000 finally seeing some strong move here last several weeks. Gap from Monday is still remains open which has been fueling this move last three days. However, should the price falls, buyers want to see 140ish level to hold to protect the gap to be unfilled (if it fills the gap we want to see 139-138 level to act as strong support), if we can do that I believe new ATH is coming soon here. I am still holding EVERYTHING-all of my CALLS since 136.53, 136.72, 138.46, 139.30, 140.18, & 141.05.
Just a while ago as it seems, everyone was freaking out and busy exiting or shorting the small-caps when the Russell has broken below the major support at 135.80ish on 8/18/2017. well, I was busy calling for the major reversal and buying the dips. Interestingly enough, as quickly as the Russell fell, it reversed just as quick as we are trading at a near all-time high level yet again. There were many shake outs and shenanigans throughout the months, but my analysis and forecast on the Russell hasn’t changed since the day one when I first engaged with IWM – I am still standing firm on that as I did on 8/18/2017. On my last market update video I talked about how it could go “straight up,” and I think it’s possible with the short-term ups-and-downs. However, should the price struggle to overcome the 144ish level, we probably want to see 142ish level to hold for the minor-term sentiment to stay bullish and this bullish momentum to stay alive. Let’s see how it plays out this week. I am still holding everything–all of my CALLS since 136.53, 136.72, 138.46, 139.30, 140.18, & 141.05.
Well, Russell 2000 (IWM) really is going “straight up” as it has, finally, broken out of this dreaded 8-month consolidation with today’s statement-making thrust, printing new all-time high. Can it really keep going like this? It’s possible as most of the buyers were neglecting the small-caps or got burned and was not paying attention until recently. Today’s move was pretty much a ‘panic buying’ as FOMO (fear of missing out) people are stepping in. It’s always a sucker’s game if you are chasing a move–I assure you, only people who are truly profiting from this move are the ones who has been buying the dips and been patiently waiting for months. Most traders either got stopped out with a loss in August, or tried to short in mid-August and got burned, or attempted to get in before the breakout and got chopped to death pretty much all year long.
Indeed, it was probably the toughest trade I’ve done so far this year but because of that I believe it’s going to be the most profitable trade this year–you reap what you sow. I am still targeting 155 before unloading any of my positions, and should the price fall in the next few days I would want to see 144-145 hold for the minor-term sentiment to stay bullish. As of today, I am holding everything–CALLS since 136.53, 136.72, 138.46, 139.30, 140.18, & 141.05.
Without being accused of arrogance I think I can say that this is exactly what I envisioned/expected from the Russell when I was aggressively buying the dips–accumulating CALLS March through August, as my followers know that I’ve been documenting my entries and thoughts in my Journal Post on every turn. I am expecting and envisioning much higher move from the Russell remainder of this year and two quarters of next year with the minor-term corrections along the way. And that’s why I am still holding all of my CALLS as of today–no ‘trim-and-trail‘ (day-trader’s term), only trusting my analysis and standing firm on my projected target before unloading some of my positions. Today, my RSI indicator just hit a historical new all-time high as IWM prints 150 today; we are probably going to face some kind of short-term pullback or consolidation in the near term. I don’t think we will pullback all the way down to breakout level of 144-145, but if we do, I will be adding more CALLS. I am holding everything as of today–CALLS since 136.53, 136.72, 138.46, 139.30, 140.18, & 141.05.
I’ve decided to close 1/3 of my CALLS earlier today at 150.13 to lock-in some gain here. I still think we can get to 155s before the year ends which was my original target. This morning’s gap-up would be important if it’s unfilled next week for the minor term buying-pressure to continue higher. Let’s see how it plays out as I am still holding remainder-sizable CALLS since 136.53, 136.72, 138.46, 139.30, 140.18, & 141.05.
PART: 1, 2, 3 • IWM ANALYSIS