The reversal that took place yesterday in the overall markets and especially the iShares Russell 2000 ETF (NYSEARCA:IWM) are tricky to enter once the initial reversal has passed.
Having entered at the pivot and now well in the green, there is some leeway allowed to increasing the line.
With that in mind, the short position in the small caps was increased by 67% with the purchase of the Direxion Small Cap Bear 3X ETF (NYSEARCA:TZA) in the pre-market at 15.05.
The average cost per-share now rises to 14.40, which is below support and in an area that is not likely to be seen by this market.
Chart by TeleChart
The IWM may indeed retrace at the open or shortly thereafter.
However, waiting for a retracement in the middle of a significant reversal is a low-probability approach. It may happen, or the IWM may just fall away without looking back.
Disclosure: The author is long TZA.