I was running through some charts and I have an addition to the volume off the high list...... the IWM or Russell 2000 ETF.
I think this chart bears close watching. The small caps are losing energy. A lot of it actually. The RSI has clearly diverged from the price trend, making successively lower highs since February versus price that has been up to flat. The same can said about the MACD and stochastics, with both diverging, and suggesting that momentum is on the down swing.
More worrisome is that downside volume is acceleration with 50 to 65 million shares changing on hands on downtrend seen in the beginning of April, followed by mid-April sale where 75 to 100 million shares hands, and finally 120 million shares in yesterday's selloff. To me, this suggests institutional money getting out of riskier assets, a worrisome event if it proves true.
Additionally, I thought it would illustrative to run the IWM through my Price/Volume Diffusion Index. The following are the results.
The diffusion index has fallen off the map in recent trading days, presently sitting at 46.3. This is below 50 and suggests future weakness in the price.
With the fall off in the diffusion index and the negative setup technically, I am taking a short position in the IWM in the Short-Trading portfolio. Additionally, I am going long the Inverse (1x) Russell 2000 ETF (ticker RWM) in the Long-Trading Portfolio.
I have concerns that what we are seeing here in the Russell 2000 has broader implications for a reweighting of risk across broader market.
I think this chart bears close watching. The small caps are losing energy. A lot of it actually. The RSI has clearly diverged from the price trend, making successively lower highs since February versus price that has been up to flat. The same can said about the MACD and stochastics, with both diverging, and suggesting that momentum is on the down swing.
More worrisome is that downside volume is acceleration with 50 to 65 million shares changing on hands on downtrend seen in the beginning of April, followed by mid-April sale where 75 to 100 million shares hands, and finally 120 million shares in yesterday's selloff. To me, this suggests institutional money getting out of riskier assets, a worrisome event if it proves true.
Additionally, I thought it would illustrative to run the IWM through my Price/Volume Diffusion Index. The following are the results.
The diffusion index has fallen off the map in recent trading days, presently sitting at 46.3. This is below 50 and suggests future weakness in the price.
With the fall off in the diffusion index and the negative setup technically, I am taking a short position in the IWM in the Short-Trading portfolio. Additionally, I am going long the Inverse (1x) Russell 2000 ETF (ticker RWM) in the Long-Trading Portfolio.
I have concerns that what we are seeing here in the Russell 2000 has broader implications for a reweighting of risk across broader market.
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