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Pre-Market: Russell Small Cap Reversal May Fail

|Includes:iShares Russell 2000 ETF (IWM)

Yesterday, the iShares Russell 2000 ETF (NYSEARCA:IWM) posted a reversal.

(click to enlarge)IWM DailyClick to enlarge

Chart by TeleChart

At the pre-market session, price action is indicating that the reversal may fail.

If there is a failure of the reversal, tracking funds such as IWM and the Direxion Russell 2000 Bullish 3X ETF (NYSEARCA:TNA) may be in serious trouble.

On the other side of the coin, the Direxion Russell 2000 Bearish 3X ETF (NYSEARCA:TZA) may be in an excellent position to rally.

Failures like this present good low risk opportunities when positioning in the direction of the failed condition.

This set-up may be so good that the position in the Direxion Daily Gold Miner Bear 3X ETF (NYSEARCA:DUST) is lightened-up to free capital and margin for an entry in TZA.

Not entering yet but watching closely.

Disclosure: I am long DUST.

Stocks: IWM