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Paul Mosgovoy
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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
  • Russell 2000: Now We Run The Stops 0 comments
    Aug 6, 2014 12:43 PM | about stocks: IWM

    Yesterday, it looked as if the counter trend move in the iShares Russell 2000 ETF (NYSEARCA:IWM) was complete and that the index was heading lower.

    Price action today shows that too many stops were placed at yesterday's high in the IWM and so those stops must be taken out before proceeding.

    This type of action is automatic and computer controlled.

    That means that computer buy and sell programs are being continuously generated (modified and regenerated) based on where the (stop) orders are located.

    (click to enlarge)IWM 2-Minute

    Chart by TeleChart

    This link should help provide authentication for the above statement.

    • Scroll down to Item No. 5 for details

    For this particular part of the move, the low risk entries were identified on July 3rd and July 24th.

    Having established at those levels, the price action of the past few days has been a mere annoyance as opposed to being beat about the head and shoulders.

    Note that today may also be a low risk point for entry. Being this far in the move, it won't be readily known until later.

    Nonetheless, I must indicate that if I were to increase my line (which I am not going to do) in the Direxion Russell 2000 Bearish 3X ETF (NYSEARCA:TZA), I would do it at current levels and set the stop (for this additional position only) at the day's low.

    Disclosure: The author is long TZA.

    Additional disclosure: Illustration only. Not investment advice.

    Stocks: IWM
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