Falling with the Foliage

The small caps in the Russell 2000 Index continue to throw cold water on any attempts at a broad market bounce.

In addition, the blow-ups of the day can be seen in the massive drops in ARWR SHLD.

To be sure, healthy charts are few and far between these days, as I expect the senior indices to continue to buckle under the same pressure the small caps have been facing for a while now. Although it seems as though a bounce is due, my sense is too many are expecting just that. Admittedly, however, it is always tough to gauge sentiment.

I am still pressing shorts inside 12631 and remaining opportunistic with inter-market trades.

Currently, the S&P 500 cash is testing its under-watched 150-day moving average, which offered support last Thursday, down at 1930 or so. Bulls are going to need to defend that in order to prevent new pullback lows.

Overall, cash is a powerful position in this environment. I am electing to look for opportunistic shorts, namely AAPL MA SBUX, and others, in the event things really do get flashy from here.

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out) which I published for members and 12631 subscribers this past Sunday.

 The Russell 2000 Index, featuring high beta, small market capitalization issues with tons of institutional sponsorship by growth managers, has been our main key to this market for quite some time now. The small caps’ persistent weakness has largely seen us maintain a rather defensive portfolio posture as swing traders amid their technical deterioration.

Last week, the Russell momentarily breached 1,082, our major downside support level and indeed “neckline” which would trigger a confirmed multi-quarter topping pattern, before staging an upside reversal on Thursday afternoon and Friday. Against that backdrop, the Russell and indeed broad market can easily bounce higher yet in the early portion of this coming week of trading.

However, a short-term bounce does not negate the technical damage we have witnessed in the Russell and indeed other parts of the market. In the next subsection of this strategy session, I will zoom out and look at the major indices to keep that broad perspective.

But, for now, traders should be on guard for a bounce in the Russell potentially up to the 1,130-1,140 area, which would mark the 20 and 50-day moving average convergence.

At that point, traders can stalk fresh short entries in the Russell, provided that we see signs of the rally failing. Of course, if the bounce immediately fizzles out early next week and small caps attack 1,082 again, the presumption is that we will see a violent breach of support which will, in fact, trigger the multi-quarter top.

Please click here to continue reading

Here are some actionable short ideas on this list, especially if the market sees another day of weakness.

Courtesy of The PPT algorithm, here are some very aggressive ideas for short trades headed into Friday If you are not comfortable shorting (especially in a bull market), there is nothing wrong with taking a pass. Keep those cover-stops in place.

Nonetheless, a good chunk of readers are always looking for short ideas.

Members of The PPT can click here to view and save this “Titanic” Screen, as I named it when I created it a few years back. The screen isolates stocks vulnerable to further weakness.

Please click on image to enlarge 

________________________________________________________

For you night owls out there, feel free to drop me any market/trading-related topics you would like me to cover in a weekend video.

In addition, anything else about the current market, feel free to drop below.

Speak your mind, night owls.

The High Yield corporate paper and junk bond ETF’s, below on their daily charts, look to be two of the better actionable short setups for Wednesday. I like them as shorts on weakness.

Overall, they have been weak for quite some time and are typically indicative of something afoot, in terms of dislocations and potential reverberations through other asset classes, including equities.

Drop me your top tickers overnight.

__________________________________________________________________

__________________________________________________________________

If you enjoy my blog posts and videos, then I would encourage you to please click on this 12631 hyperlink for more details about joining our great team of traders at a very reasonable price. 12631 is a trading service which @RaginCajun and I direct here at iBankCoin.

In addition, please see the top of this video for details about attending our iBC Investors Conference this November.

Enjoy tonight’s video, and enjoy your evening. 

Direct Vimeo Link Click Here