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Closed short in $RTY this morning, for 1.35%, a few comments:

macro support resistance Russell 2K $IWM

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#1 viccarter

viccarter

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Posted 07 November 2017 - 02:33 PM

Haven't posted regularly on here in a while.  Honestly, it has been a little too much hubris for my taste for several months regarding the bull side -- not they are not right so to speak -- but the volitality has been such that I knew it was very low probability that we could really sell.  I wouldn't call it picking up quarters in front of a bull dozer - I'll call it picking them up in front of a dozer with a guy standing there to scream "lookout!" when the dozer gets close.  Low risk, low reward.

  • Macro wise, I do adhere to the Paul Tudor Jones saying that "you cannot judge or gauge the last 1/3 of a bull market"
  • That being said I have been looking to short $IWM, $RUT in select spots since the end of September.  And it has been the right move so far.  As you can see, I was bullish biased from Aug. 22-Sept. 27 when I became bearish.
  • The late Sept. area represents an area in $RUT where it may not necessarily be a top that day or next, but in retrospect within a few weeks to month, we will see that it was a very attractive AREA to become short biased.
  • This site has become prone to a day trading ethic as there has been little risk to the long side despite little reward.  This causes traders to leverage up and try to capture those low percentage but high probablilty gains on a short term basis while relying on the belief they they will always be bailed out long when they are wrong.
  • Now as you can see if you were to pull up any daily chart of the $RUT, this is our 4th test into that Sept. 27 pump.  Of course, there can be 2 ways to look at this:  one trader might say that we are establishing support at this level.  Another, myself included, might feel as if we are probing for weakness until we break.
  • When did I open this trade?  Close of day 11/2. 
  • Why did I take this short?  Overall thesis has been to short pops in $RUT since end of Sept.  11/2 was an excellent, hi probability area to short because of the extensive distribution that day.  Also the previous day, 11/1 had been a major reversal day and a rejection of higher prices in $RUT.
  • Why did I close this morning?  You never know when something will continue to move further in one direction, but with the bullishness and ATH's in $SPX and $DJI, I just see them as being bought up again and dragging $RUT back up.  However, I am looking for another hi-probability area to take the next short.  $RUT can top months before the bigger indexes.
  • Until the next time, regards.
  • 2017-11-07_1238.png


#2 dowdeva

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Posted 07 November 2017 - 06:42 PM

Viccarter, thank you for such a comprehensive and well thought out post and nice to see you back.

 

Are you using solely using $TRIN to gauge distribution, as is implied by your twitter alias? Or is there anything else? I still haven't closed my IWM short calls, was looking for later in the week (potentially as early as  tomorrow), and was wondering what you were seeing that I wasn't.

 

Best regards,

 

~D



#3 viccarter

viccarter

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Posted 08 November 2017 - 04:43 PM

Viccarter, thank you for such a comprehensive and well thought out post and nice to see you back.

 

Are you using solely using $TRIN to gauge distribution, as is implied by your twitter alias? Or is there anything else? I still haven't closed my IWM short calls, was looking for later in the week (potentially as early as  tomorrow), and was wondering what you were seeing that I wasn't.

 

Best regards,

 

~D

 

Thanks for the kind words.  To answer your question, I do heavily rely on a custom reading of R2K TRIN using R2K Adv/Decl data.  I keep regular charts of NYSE TRIN but do not use them in the same manner.  I have discussed some methodology on TT over the years; it is basically a card counting/probabilty measure when I see certain readings of the R2K TRIN during the day and continuing throughout the close.  I assign values of +2 long, +1 long, neutral or 0 (no edge), -2 short, -1 short these values are based on my discretionary judgment of what the R2K is doing in terms of trending or non trending.  I had a discretionary -2 short last Thursday at the close, so I took a full short.  It's not a holy grail or the only factor that I use, but it is a system where I feel comfortable when I get the right setups.