Today’s action is a perfect example of why this is such a dangerous market, but things could cool down overnight and the ‘buy’ signal in the daily chart of IWM via the 5/10 method could get totally confirmed over the next couple of days. Meanwhile, all those retail longs that chased IWM after the gap up will now have to try to figure out if today’s candle is a long-legged doji, a gravestone doji, or a shooting star.
On the 60min chart of IWM below, you can clearly see when the Big Boyz started to unload. The selling started around 2:20 and continued to about 3:56 taking IWM down about $2.00 U.S. Then, to make things interesting, THEY spiked the market up a wee bit at the close so it wouldn’t look so bad because appearance is everything. Even so, IWM closed out the day up 2.15%. The very important thing now is going to be for IWM to stay above 66.37, especially on a closing basis.
Disclosure: I am not long or short IWM in any way, but given the right circumstance, I would consider a long position via UWM or TNA. But not just yet.
Chart courtesy of FreeStockCharts.com
Be careful. THEY really are out to get you.