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IWM trade ideas

Reasons to be cheerful?Both the S&P 500 and NASDAQ 100 closed at fresh record highs on Friday. The Dow ended a tad lower, pulled back by a fall in UnitedHealth which is its major constituent by weighting. Meanwhile, the broad-based, domestically-focused mid-cap index, the Russell 2000, tacked on over 1%, but remains around 15% adrift of its own record highs from back in November 2021. That’s not the only US stock index which has failed to hit a new record this year. The Dow Jones Transportation Index is currently around 7% below its own all-time high, which, like the Russell 2000 (and also the NASDAQ 100, although that old record has been well and truly surpassed) was hit back in November 2021. Does this tell us anything? Perhaps it does. It suggests that there is still a lack of breadth in the rally which, since it began in October last year, has had plenty of time to broaden out. Yet it hasn’t, as investors still lack the confidence to look outside the favoured few. Just look at NVIDIA. It closed out at another record high on Friday, and has added 3% today alone. It is now up over 30% from the low hit just prior to its earnings announcement ten days ago. There will be plenty of traders and analysts who say, ‘Who cares about the Transports and Russell? It’s new technologies which are changing the world, not airlines, trains and small domestically-focused companies.’ We’ll see. In the meantime, the fourth quarter earnings season is drawing to a close with 97% of S&P 500 constituents having now reported. Analysis from FactSet shows that the latest S&P P/E ratios are above both their 5 and 10-year averages, suggesting some overvaluation. Bullish sentiment coupled with FOMO suggests that the path of least resistance is still up. But that sentiment can change quickly and often without warning. This week’s big events include Fed Chair Jerome Powell’s testimony in Washington on Wednesday and Thursday, with Non-Farm Payrolls on Friday.
AMEX:IWM
by TradeNation
Defining Target for Risk Reward: Maybe you shouldn't?The trade plan is broken up into parts. We have an objective and consistent entry, stop, and exit plan. Here I will be talking about the exit plan and setting targets that will give you a particular risk/reward ratio. There are no absolutes when it comes to what risk/reward you should be aiming for, a lot has to do with how you handle risk and loss and your overall understanding of markets. Defining the stop (risk) is relatively easy compared to defining the target (reward). Mostly you need a clean set of statistics on an objective method. This will give you an average distance that the swing will run in relation to your method. The reward part of the equation is a function of how far your stop is to your entry. There is no one-size-fits-all when it comes to trading. For many, it may be best not to set a target, but instead use something simple and objective like a moving average to exit the trade. This way, you get what the market gives you while incorporating consistency and objectivity into your exit plan. Keep it simple, objective, and consistent, and learn as you go. In the video, I make something up on the spot that may give you some ideas. I use a 20ema as a profit stop only after price has made a new high. It's simple, principle-based, and it's objective. No matter what your method, knowing where you are in the swing cycle will help in defining entry, stop, and target, and this will directly influence the risk/reward ratio. Shane
AMEX:IWMEducation
by ShaneBlankenship
2
Cup and Handle + Channel breakoutThe Russel 2000 has been in a steady range between 162 and 200 since January 2022 – more than two years now. The current situation presents some bullish signals. This is the 6th time it's touching the upper side of the range. Generally, more touches on one side of a channel increase the likelihood of a breakout in that direction. Additionally, a substantial cup and handle pattern has formed, and there's room for RSI to climb on the weekly chart. Resistance: 217.33 (R1 Pivot) Target Price: 233.16 (R2 Pivot) Support Level: 189.28 (P Pivot) It's essential to exercise caution though, especially if the broader market corrects, which seems likely in the mid-term. A broader market correction always impacts the Russel 2000 as well.
AMEX:IWMLong
by benedekdomotor
1
IWM Long Term PerspectiveIWM saw a very strong bounce with triple positive divergence. After a very unhealthy rally in the last couple of weeks, we have seen IWM struggle to go green on the daily. With the RSI extended like this we could tap the trend line one last time before the Fed pivots and we rally into 2024. Then Crash. IWM is a great representative of the true economy rather then the mega caps who blur everything. There was a very large triangle pattern that was broken on the down side, which I can definitely see moving further. If the GREEN support line is broken, I will close out my trades.
AMEX:IWMLong
by LeapTrades
Opening (IRA): IWM April 19th 176 Monied Covered Call... for a 171.23 debit. Comments: Buying stock and selling the -75 call against to emulate the delta metrics of a 25 delta put. This setup gives me a slight bump in premium over selling the 25 delta put due to call IV skew, along with built-in position defense with the short call. Laddering out over time after flattening out at the end of the year. I'll naturally look to add in shorter duration if I can get in at strikes/cost basis below what I currently have on, but will probably continue laddering out to the end of the second quarter (June) for a bit here. Will generally look to take profit at 50% max; look to roll out the short call to reduce cost basis further should price traverse the short call strike (since extrinsic is highest in at-the-money strikes).
AMEX:IWMLong
by NaughtyPines
Opening (IRA): IWM March 15th 183 Monied Covered Call... for a 179.87 debit. Comments: Doing another one of these in March with a short call strike and cost basis better than what I currently have on at the 186. Selling the -75 delta call, buying a Johnny one lot to emulate a 25 delta short put in order to take advantage of call side IV skew. 3.13 max profit on BPE of 179.87; 1.74% ROC at max; .87% at 50% max. Will generally look to take profit at 50% max/roll out the short call to reduce cost basis further in the event price breaks the short call.
AMEX:IWMLong
by NaughtyPines