Russell 2000 finds itself on rising support…support is support!
With a uniform looking “Head & Shoulder” formation at hand, the bottom of the rising channel looks to be the neckline for the H&S pattern… creating an increased level of importance to this support line!
If this pattern read is correct the downside should be large…if you want to score on defense, let this pattern prove itself. You don’t have to be on the train the exact moment it leaves the station!
Your welcome Mike.
My goal is to “inflate” investors accounts regardless of market direction, with low risk/high return pattern opportunities.
Most of the patterns will put the odds around 65% in our favor Mike, which means they are still wrong 35% of the time.
I know we will be wrong, yet I also know we won’t be “wrong for long!”
Thanks, Chris. I am new to this but have made money following your advice earlier this month and last month. Hope your website gains visitors like crazy.
Mike,
To each is own…
I like to replace mentally the narrow line I use on the charts with a “crayon” thickness line.
With this in mind many prefer to give it a percent or two below the line to confirm, before taking the position.
For those that believe the “H&S” pattern read is correct, you can do the opposite and take the position to score on defense with a 2-3% stop loss on the inverse tool.
I believe the read is correct if that helps any!
Chris
Bob,
What you shared per the 2x’s is priceless.
Sorry for the experience, yet grateful for you to share!
This will save others a ton!
Chris, no I was just basing that on my own hard experience. I had a lot of the 2xREIT (inverse) SRS over a period when the REITs imploded. Some I held for the longest period actually lost money, even though the index was still down 30%+. I realized how they worked, but never expected the long-term moves would vary so completely from the short-term. Someone on a blog showed that if you shorted both a 3x bull fund and its corresponding 3x inverse fund, you would make money. It’s due to some mathematical principal, I think.
Congratulations on the blog! One thing, though, I find a little annoying is not being able to use the mouse or move the cursor. For people who type as poorly as I do, it makes it hard. 😉
Bob in MA,
Great comments on the double etf challenges.
The put idea is spot on. Another play to consider if finding a 1X’s inverse no load mutual fund.
I do hope I haven’t implied that leverage is important.
Thx Bob…
I would like to offer a piece of advice for anyone wanting to go short, or as Chris calls it, playing defense. Stay away from the double-short ETFs, unless you are literally day trading. If you want to make a leveraged bet against an index over a longer period, use in-the-money puts. You can get 2x leverage for a small premium and pick the time span you want.
For instance, you can buy a November put on the Russell 2000 ETF (which is at $60.50) with a strike price of 85 for 24.81. If you want to make a smaller bet with more leverage, the 75 strike is just 14.92.
How do you know if the support line is taken out? For example, as I write this, RUT is at about 606. Is this down enough or do I wait a few days?
Thanks in advance to anyone who can help.