Paul Mosgovoy's  Instablog

Paul Mosgovoy
Send Message
Truth is timeless: “Markets never change” – Jesse Livermore, 1923 The early masters, Livermore, Wyckoff and Loeb isolated themselves from the crowd and crowd thinking. None of them ever graduated high-school and yet they each became legends in the market. Their techniques have been time-tested.... More
  • TZA Wrap-Up For 10/31/13 0 comments
    Oct 31, 2013 5:51 PM | about stocks: IWM

    For the purposes of this update, we are going to use the iShares Russell 2000 ETF (NYSEARCA:IWM) for the example data.

    We have included a chart of Direxion Russell 2000 Bearish 3X ETF (NYSEARCA:TZA) as a reference.

    As the daily chart of IWM indicates below, we may be at a top that will allow a significant down-side (upside in TZA) for a low risk trade.

    The chart shows an apparent wedge pattern with what looks to be a "throw-over" of the wedge. To give credit where it is due, the first place we saw the "throw-over" term used, was in some material published by Elliott Wave International during the 1980s.

    Not sure if they originated the term or not but just giving the reference.

    According to long established trading rules, when the pattern throws-over, the entry signal is given when price action enters back into the wedge. This is exactly where we are now.

    In this instance, the stop can be tight because if the pattern fails, meaning if price action continues higher, then the trade set-up is invalid.

    (click to enlarge)IWM Daily chart

    Charts by

    (click to enlarge)TZA Daily chart

    Instead of going short IWM, we have gone long TZA and have our stop just below today's low.

    We are long TZA (the 3X inverse of IWM) with a stop at 20.23


    This report is for discussion purposes and contains our opinions only.

    This posting is to publicly document our thinking and market analysis actions within the Three Ten Trading entity. The data was obtained from sources believed to be reliable. However, we make no guarantee as to the accuracy of that data.

    Investing or trading in equities, futures or options may result in a significant loss of capital, total loss of capital or a loss greater than available capital.

    We are not advocating any stock or in any way offering portfolio management advice or stock selection service.


    Paul Mosgovoy, President: Three Ten Trading, LLC

    Thank you for reading.

    Disclosure: I am long TZA.

    Stocks: IWM
Back To Paul Mosgovoy's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.